NOVADAQ Technologies (NVDQ 11.70, +5.70) has enjoyed a banner start to the trading week, having jumped 95.0%, after agreeing to be acquired by Stryker (SYK 142.95, +0.71) for $11.75 per share in cash. The transaction price amounts to $701 million, which represents a 95.8% premium to Friday's closing price.
NOVADAQ is best known for its minimally-invasive SPY and PINPOINT imaging technology. Using NOVADAQ's SPY fluorescence imaging technology, physicians can personalize therapy and achieve optimal results through the precise visualization of blood flow in vessels, micro-vessels, tissue perfusion and critical anatomical structures during treatment. SPY technology enables the delivery of personalized therapies and the achievement of the optimal results for each individual patient.
For its part, Stryker manufactures implants used in joint replacements, surgical equipment, surgical navigation systems, and other types of medical equipment. The company has three business segments, including Orthopedics, Medical & Surgical, and Neurotechnology & Spine.
Stryker President Timothy Scannell said, "This acquisition aligns with our focus on enabling our customers to see and do more by enhancing cross-specialty surgical visualization. NOVADAQ's unique, innovative technology complements our advanced imaging portfolio and expands our product offerings into open and plastic reconstructive surgery. Their innovative technology can reduce post-procedure complication rates and the cost of care for a broad variety of surgical treatments."
In order to complete the transaction, NOVADAQ will hold a special meeting on August 4, 2017, during which the company will look to receive approval from 66.7% of its shareholders.
The acquisition agreement contains a non-solicitation covenant for NOVADAQ and it stipulates the company may need to pay a $21 million termination fee to Stryker in certain circumstances.
Stryker expects that the transaction, which should close in the third quarter, will be dilutive to 2017 earnings by $0.03-$0.05 per share. However, the company has not changed its earnings outlook for the year, expecting bottom-line results between $6.35 per share and $6.45 per share. The transaction is expected to be neutral to 2018 earnings.