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RTI Surgical to sell OEM unit to private equity firm
Posted on Tuesday, 14 January 2020 13:56
Montagu Private Equity has agreed to acquire the original equipment manufacturer (OEM), sports and reconstructive surgery division of RTI Surgical for USD 490.00 million, the majority of which will be paid in cash.
The unit designs, develops, manufactures and distributes biologic, metal and synthetic implants for a global customer base used in surgical procedures including orthopaedic, spine, sports medicine and general surgery.
RTI Surgical will focus on being a pure play spine business following closing, with proceeds from the sale to be used to repay indebtedness and to capitalise on continued investment in its portfolio.
Completion of the deal is slated for the first half of 2020 and remains subject to the green light from shareholders and regulators.
RTI Surgical was founded in the 1990s as a small tissue bank at the University of Florida but has since grown both organically and through acquisitions to become a leading surgical implants company, with long-term relationships with blue-chip customers.
Chief executive Camille Farhat said: “The sale of the OEM business to Montagu completes the first phase of our strategic transformation to reduce complexity, drive operational excellence and accelerate the growth of RTI Surgical.”
He added that the group’s spine operations will have generated global revenues in the range of USD 118.00 million to USD 119.00 million with gross margins of 75.0 per cent in 2019.
According to Farhat, RTI Surgical is expected to be debt-free following completion of the sale, with between USD 175.00 million to USD 200.00 million of cash on the balance sheet to support growth to be driven by novel therapies.
At the same time of the announcement, the group also published its preliminary fourth quarter and full year financial results for 2019.
RTI Surgical is expected to generate total revenue of USD 307.00 million to USD 308.00 million in the entire 12-month period, with the OEM segment accounting for around USD 189.00 million of this amount.
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