NEW YORK (The Deal) -- The U.K.'s Smith & Nephew hopes to get a leg up in the fast-growing sports medicine sector through the $1.5 billion acquisition of Nasdaq-listed ArthroCare (ARTC) which counts One Equity Partners LLC as its largest shareholder.
The London-based buyer said Monday it agreed to offer $48.25 a share in cash for Austin, Texas-based ArthroCare. The offer price is price is 6.3% above the target's closing share price Friday on Nasdaq, and the $1.5 billion enterprise value, which is net of roughly $200 million of cash, represents a multiple of 15.7 times adjusted 2012 Ebitda, according to Smith & Nephew.
Smith & Nephew shares added 1.4% in London Monday morning to trade at 888 pence, for a total market value of about £2.92 billion ($4.77 billion). Smith and Nephew is looking to the acquisition to bolster its offerings in noninvasive sports medicine.
"This is a great deal that rebalances Smith & Nephew in areas of higher growth," said Smith & Nephew CEO Olivier Bohuon on a conference call.
Through the purchase, the U.K. company will gain ArthroCare's patented Coblation technology for gently dissolving injured tissue and minimizing damage to surrounding healthy tissues, as well as ArthroCare's range of solutions for joints, in particular the shoulder, including its so-called Opus-AutoCuff knotless implants. The buyer said it sees additional growth opportunities through ArthroCare's related ear, nose and throat business.
The buyer said it will use an existing $1 billion revolving credit facility, and a new two-year $1.4 billion term loan facility from Barclays plc and JPMorgan Chase & Co. to help finance the purchase. It is suspending a $300 million share buyback program, having already bought back $226 million of stock.