Arthrocare's Buyout Value Looks Bloated

Since early March, when Arthrocare(ARTC Quote) suddenly decided to explore "strategic alternatives," the company has seemed eager to ink a deal.

On paper at least, Arthrocare looks like an attractive takeout target. The Austin, Texas-based medical device maker boasts a remarkable growth rate, especially in the lucrative spine space, and it has been reporting a solid profit for the past nine years.

Late last year, however, with Arthrocare riding high on yet another record quarter, short-sellers took direct aim at the company. At the time, Arthrocare had seen its spine sales almost double because of soaring demand for its disposable "SpineWands." But short-sellers claimed that Arthrocare had been leaning heavily on its DiscoCare division -- a firm suspected of supplying SpineWands for unnecessary surgeries -- to drive up that demand. ...