Integra Offers to Buy J&J's Codman Business for $1.05B

Markets Reuters

Medical device maker Integra LifeSciences Holdings Corp said on Wednesday it has offered to buy Johnson & Johnson's Codman neurosurgery business for $1.05 billion in cash.

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Integra, which makes products used in neurosurgery, reconstruction, wound and dental care, said Codman's devices would bolster its pipeline of offerings for tissue ablation, spinal cord repair and cranial stabilization.

If the bid is accepted, it will add to Integra's adjusted earnings per share by at least 22 cents in the first full year after closing and increase thereafter.

However, Integra said it expected some disruption in the Codman business in the first year following the purchase. The company forecast the business would grow 3-6 percent in the longer term.

The Codman neurosurgery business, which is part of J&J's Depuy unit and markets devices for use in neuro-critical care and electrosurgery, generated sales of about $370 million in 2016.

The U.S. healthcare giant, which is buying Swiss biotech company Actelion Ltd in a $30 billion deal, said last month it was reviewing strategic options for some of its diabetes care businesses.

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Up to Tuesday's close, Integra had gained about 56 percent in past 12 months, while J&J had risen 14 percent.

Plainsboro, New Jersey-based Integra, which hopes the transaction will accelerate its path to generate $2 billion in revenue, said it has obtained committed financing from BofA Merrill Lynch and JPMorgan.

BofA Merrill Lynch is serving as Integra's financial adviser, while Latham & Watkins LLP is its legal adviser. (Reporting by Divya Grover in Bengaluru; Editing by Martina D'Couto and Shounak Dasgupta)