Wright Medical Will Merge With Tornier in All-Stock Deal
Wright Medical Group Inc. (WMGI), a U.S. maker of bone implants, will merge with Tornier NV, creating a new company valued at $3.3 billion in the latest proposed tax inversion since tighter rules were announced last month.
The legal address for the new company, to be called Wright Medical Group NV, will be in the Netherlands, where Tornier has been based for about eight years, the companies said yesterday in a statement. Wright has been based in Memphis, Tennessee, where the new combined company’s U.S. headquarters will remain, according to the statement.
“This combination will create the premier extremities-biologics company with a broad global reach,” Robert Palmisano, Wright’s president and chief executive officer, said in the statement. “Together, we will have one of the most comprehensive upper and lower extremity product portfolios in the market.”
Each outstanding share of Wright will be exchanged for 1.0309 shares of Tornier (TRNX), giving Wright’s shareholders 52 percent of the combined company when the transaction is completed, the companies said. The deal provides a 28 percent premium for Tornier’s shareholders compared with the company’s closing price of $23.59 on Oct. 24, the companies said.
Wright is the latest U.S. company to announce plans to adopt a legal address in a lower-tax country overseas, a strategy known as inversion. Reacting to a series of inversions this year, the U.S. Treasury Department on Sept. 22 tightened tax rules to make the transactions less attractive. Wright is the third company to announce inversion plans since the new rules were published.
Inversion Costs
A congressional committee estimated in May that future inversions may cost the Treasury $19.5 billion in forgone tax revenue over the next decade.
Wright reported $242 million in 2013 revenue and employs 1,000 people globally. Tornier, which makes products for the repair of shoulders and other joints, had 2013 revenue of $311 million with 1,076 employees worldwide, the companies said in a regulatory filing.
“The highly complementary strengths of the two businesses will significantly increase the combined company’s diversity and scale, without diluting our focus,” Palmisano said in a conference call.
The transaction is expected to close in the first half of 2015, the companies said.
