Mazor Robotics (MZOR 58.15, +5.39,
+10.23%) is up today after announcing it has agreed to be acquired
by Medtronic (MDT) for $58.50 per ADS in cash, for a total value of $1.64 bln,
or $1.34 bln net of Medtronic's existing stake in Mazor and cash acquired. The
boards of directors of both companies have unanimously approved the transaction.
Israel-based Mazor Robotics pioneered the application of robotics technology and guidance for use during spinal procedures, and is the market segment's leader. In 2011, the company introduced the Renaissance system and, in 2016, it launched the next generation Mazor X system. To date, more than 200 Mazor systems are in clinical use on four continents and have guided the placement of more than 250,000 implants during some 40,000 procedures, enabling minimally-invasive spine surgery to become standard procedure in many hospitals. Medtronic plc is among the world's largest medical technology companies.
Medtronic plc is the successor to Medtronic, Inc. and Covidien which were combined in January 2015. The new company is based in Ireland. MDT reported $30 bln in sales in FY18. It has four operating and reportable segments:
- Cardiac and Vascular Group ($11.4 bln): This segment is made up of the Cardiac Rhythm & Heart Failure, Coronary & Structural Heart, and Aortic & Peripheral Vascular divisions. The primary medical specialists who use its Cardiac and Vascular products include electrophysiologists, implanting cardiologists, heart failure specialists, cardiovascular, cardiothoracic, and vascular surgeons, and interventional cardiologists and radiologists.
- Minimally Invasive Therapies Group ($8.7 bln): This segment is used primarily by hospitals, physicians' offices, ambulatory care centers etc. Products include surgical stapling devices, vessel sealing instruments, wound closure, electrosurgery products, hernia mechanical devices, mesh implants, and gynecology products.
- Restorative Therapies Group ($7.7 bln): This segment made up of the Spine, Brain, Specialty Therapies and Pain Therapies divisions. Customers include spinal surgeons, neurosurgeons, neurologists, pain management specialists, anesthesiologists, orthopedic surgeons, urologists etc.
- Diabetes Group ($2.1 bln): This segment makes products that manage Type I and Type II diabetes, including insulin pumps.
Getting back to this Mazor acquisition, the acquisition of Mazor strengthens Medtronic's position as a leader in enabling technologies for spine surgery. Mazor's proprietary core platform technology, including the Mazor X Robotic Guidance System and the Renaissance Surgical-Guidance System are transforming spinal surgery from freehand procedures to accurate, state-of-the-art, guided procedures.
By combining Medtronic's spine implants, navigation, and intra-operative imaging technology with Mazor's robotic-assisted surgery (RAS) systems, Medtronic intends to offer a fully-integrated procedural system for surgical planning, execution and confirmation. The companies plan to showcase this technology integration at the upcoming NASS (North American Spine Society) 2018 Annual Meeting in Los Angeles. MDT sees robotic-assisted procedures as the future of spine surgery. It provides surgeons a more precise, repeatable, and controlled ability to perform complex procedures.
There is history between these two companies. The relationship
originated in May 2016 under a strategic and equity investment agreement
between Medtronic and Mazor. In August 2017, Medtronic expanded the partnership
to become the exclusive worldwide distributor of the Mazor X system, leading to
the successful installation of more than 80 Mazor X systems since launch. With
today's announcement, Medtronic aims to accelerate the adoption of RAS in spine
procedures. The acquisition is expected to close by January 2019.
In sum, with a history between these two companies, a deal like this makes sense. Medtronic is already familiar with Mazor's products and has been actively working with them to expand the footprint for Mazor X. MDT traded down while MZOR is seeing a nice move in its stock today. Overall, this seems like a good fit for Medtronic.