RTI Biogenics Inc. Acquires Pioneer Surgical

Posted by on June 21, 2013

About the Acquisition

On June 12, 2013, RTI Biologics Inc. (RTI) (Nasdaq: RTIX), a leading provider of orthopedic and other biologic implants, announced its intent to acquire privately held Pioneer® Surgical Technology (Pioneer), headquartered in Marquette, Mich. Pioneer is a leading medical technology company that manufactures and distributes metal and synthetic products in the orthopedics, biologics, spine, trauma and cardiothoracic markets. The acquisition of Pioneer supports RTI’s strategic initiatives to expand its current implant portfolio into metals and synthetics and to grow direct distribution.

“The combination of RTI and Pioneer is an exciting opportunity for both companies and their employees,” said Brian K. Hutchison, RTI president and chief executive officer. “This acquisition is strongly aligned with RTI’s long term strategic plan, accelerating new growth opportunities and gross margin expansion. Pioneer has built a strong distribution network for their implants, which will be beneficial when we launch our map3™ cellular allogeneic bone graft later this year. This acquisition will bring immediate scale, allowing us to reach our strategic goals and take advantage of growth opportunities more quickly than either company could do independently.”

“We believe the combination of Pioneer and RTI will be a catalyst for continued growth,” said Daniel Webber, Pioneer’s president and chief executive officer. “The combined company will have a broad portfolio of complementary surgical implants benefiting patients, surgeons and hospitals, as well as advancing the positive momentum we have built at Pioneer. Additionally, RTI’s culture of innovation is a great fit with that of our own employees.”

TERMS OF THE DEAL

  • RTI will pay $130 million in cash to acquire all outstanding stock of Pioneer.
  • The transaction will be funded through a combination of:
    • Cash on hand
    • A new credit facility with TD Bank, N.A. and Regions Bank
    • A concurrent private placement of $50 million of convertible preferred equity with Water Street Healthcare Partners
  • Acquisition will be accretive to cash earnings per share1 and free cash flow, excluding one-time, transaction-related items in 2014.
  • The merger is subject to customary closing conditions and regulatory approvals.
  • The transaction is expected to close in the third quarter of 2013.

THE COMBINED COMPANY

  • Headquarters: Alachua, Fla., with manufacturing facilities in the United States and Germany and offices in The Netherlands.
  • Approx.: 1,100 employees.
  • The combined company will have a new name to reflect its expanded portfolio.
  • Brian Hutchison, RTI’s current President & CEO, and Rob Jordheim, RTI’s Executive Vice President & CFO, will retain their positions.
  • The remainder of the executive team will be made up of the current RTI management team and some members of the current Pioneer senior leadership.

 

Source http://www.rtix.com/rti-pioneer/
June 21, 2013

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