ConMed Explores Sale

EXCLUSIVE-Surgical device maker ConMed Corp explores sale of company -sources3 minutes ago by Thomson Reuters

(Adds background on activists, company, potential buyers, share price)

By Soyoung Kim and Olivia Oran

April 15 (Reuters) - ConMed Corp, a surgical device maker that has been fighting off activist investors, is exploring a sale and has contacted large medical device companies to gauge their buyout interest, people familiar with the matter said on Tuesday.

Utica, New York-based ConMed, which has a market capitalization of just over $1.2 billion, has been under pressure since late last year from activist investors who took issue with the company's performance and corporate governance.

In recent weeks, ConMed has asked its financial advisers, Bank of America Merrill Lynch and Greenhill & Co Inc , to approach larger orthopedic device makers regarding a potential sale of the company, the people said.

The process is at an early stage and there is no guarantee that a buyer will emerge, cautioned the people, who asked not to be named because the matter is not public.

Shares of ConMed were up 6.3 percent at $44.89 on Tuesday afternoon following the news that it was exploring a sale process.

ConMed said in an emailed statement: "As a matter of policy, CONMED does not comment on rumors or speculation. CONMED's Board of Directors and management team remain focused on creating value for shareholders."

Bank of America declined to comment, while Greenhill did not immediately respond to requests for comment.

The decision to explore a sale comes as the company anticipates a tough proxy battle at its annual shareholder meeting expected to occur by the end of July.

Voce Capital Management LLC, which sent a letter to ConMed's board in November urging it to consider a sale, nominated four candidates to the board. Separately in February, ConMed settled with another activist investor, Coppersmith Capital, by adding two of its nominees to the board and replacing the chairman.

ConMed has an attractive orthopedics and sports medicine business that could appeal to companies such as Zimmer Holdings Inc, Johnson & Johnson, Stryker Corp, Covidien Plc and Medtronic Inc, according to the people familiar with the matter.

But it also makes devices for other areas such as general surgery, gynecology, neurosurgery and gastroenterology, and the diverse product lines could present a challenge in trying to find a buyer for the entire company, one person said.

In February, British medical device maker Smith & Nephew Plc agreed to acquire ArthroCare Corp for $1.7 billion in the first major medical device deal of the year.

ConMed, which has roughly 3,600 employees, has a direct selling presence in 16 countries outside the United States and international sales represent roughly half of the company's total sales, according to its website.

ConMed CEO Joseph Corasanti serves on the company's board with his father, Eugene Corasanti, who founded the company in 1970. The elder Corasanti stepped down as chairman of the board in February and was replaced by independent board member Mark Tryniski. (Reporting by Soyoung Kim and Olivia Oran in New York; editing by Matthew Lewis)

 

Well, the rumor mill nailed this one. Will they be right about a sale announced before June? As has been said, be very careful what you wish for.

 

Who is going to buy this mess? All anyone would want is the ortho piece.

 

I hear walmart is ready to step up to the plate

 

We'll know when the transaction price ends with $0.44.

 

what do you think the final sale price would be?

 

No more than $1.5B. Maybe a slight premium over market cap, but not much. The cupboard is bare.

 

Wonder what kind of golden parachute joe will get...

 

He got one the second he was born!

 

My bet is on Zimmer, who will buy back the Linvatec sports business. They never should have sold it in the first place.

 

What do they do with the rest of the products, though? That piece is all anyone would want and the rest is just garbage.

 

Yes, if a deal does take place, Zimmer is a great fit for Linvatec, but what about ES, CET, MIS, and PC product lines. Do they buy the whole company and then spin these product lines off to whoever might buy them? Do these product lines get sold to someone at the same time Zimmer buys Linvatec? Does Conmed split into 2 companies (better happen quickly), call it Cnmd and LIN, and Lin gets sold for the same kind of vale that ARTC is going for, but CNMD remains as $270 million public company trading at $10 a share? Does the Corasanti clan, and other senior management and employees borrow money and do a buyout and take these 4 product lines into a privately held company? Does a private equity company buy these 4 product lines, hold them for a couple of years, and then try and sell them for a profit a few years down the road? Lots of questions????? Is there a company out there who would want all these products, but would really want Linvatec, but could handle the inclusion of all the products?
ETC, ETC, ETC.

 

Maybe Sean could answer some of these questions via his Blog.


Heuvos

 

Hee Hee! Sean has really benefited from all the "Conmed being sold" rumors. He hasn't been taking near the beating on this board he once did.

 

This screams private equity. Management has been killing us for years. Just sell it to the vultures who will crush us with debt and bring about the merciful end by 2021.

 

Private equity companies do specialize in buying companies where an individual piece is worth more than the whole, or an individual piece is being undervalued by the whole, however you want to look at it. Maybe someone like Bain Capital out of Boston will buy the whole company, get rid of all the relatives, waste, shed unwanted assets and people, and then sell the valuable reamaining company for a profit down the road.

 

SYK - aquiring

 

If there is a deal, SYK would be a good fit for Linvatec, as would ZMH. But again, what about the rest? Is there a company out there who would want it all? I'm an ortho guy, and not familiar or have paid much attention to the other 4 markets competitors/players.

 

There not many like this left, but if you're currently successful selling sports medicine or capital you might get a place in the new organization post-sale. But if you're successful in these areas you'll have much better prospects at other organizations. The big losers are the new kids hired in the last few years and the independent Linvatec guys. Any acquirer also has to know how badly the sales group has been run, providing a huge purchase price discount. Shareholders likewise should know that the company would have been sold for much more with better sales and marketing management in recent years.

 

I blame Sean for my poor training....or did I get the script right? He is still a tool, lol