AUSTIN, Texas, and VISTA, Calif.--ReAble Therapeutics will buy DJO in a merger deal valued at $1.6 billion, the companies announced last week.
The agreement, including assumption of debt, provides for a cash payment of $50.25 for outstanding shares of DJO common stock, representing a premium of 25 percent over DJO's average share price for the 30 trading days ended July 13. An affiliate of Blackstone Group is the controlling shareholder of ReAble and will provide the equity financing needed by ReAble to complete the transaction.
The companies provide complementary products in orthopedic rehabilitation and pain management. According to a joint statement, the combination "will offer a broad go-to-market approach through multiple sales channels."
With its Aircast, DonJoy and ProCare brands, DJO's range includes over 700 rehab products for musculoskeletal and vascular health, including rigid knee braces, softgoods and pain management products. Formerly known as dj Orthopedics, the Vista, Calif.-based company changed its name to DJO in 2006. Its products are sold in the United States and more than 70 other countries.
ReAble also makes orthopedic devices, and through its Orthopedic Rehabilitation division, distributes electrical stimulation and other products used for pain management, orthopedic rehab, physical therapy and sports performance. Its Surgical Implant division offers a suite of reconstructive joint products and spinal implants.
"DJO and ReAble have established strong positions in the orthopedic and rehabilitation markets," said Ken Davidson, CEO of ReAble. "The strategic fit, both in the U.S. and overseas, is absolutely compelling."
The deal is expected to close in the fourth quarter subject to regulatory approvals and approval from DJO shareholders.
DJO expects to hold a special meeting for shareholders to vote
on the deal. Under the merger agreement, DJO may solicit superior
proposals from third parties during the next 50 calendar days. If
the company accepts a rival bid, DJO would be obligated to pay a
break-up fee to ReAble of $18.7 million.