Tornier Withdraws and Refiles FTC Notification of Wright Medical Merger

Zimmer Holdings, Inc. and Biomet, Inc. aren’t the only two companies caught in the gears of regulatory permission to merge.

Tornier N.V. and Wright Medical Group, Inc. are also trying to weave their way through the Federal Trade Commission (FTC) waiting period required by the Hart-Scott-Rodino (HSR) Antitrust Improvements Act.

On December 30, 2014, Wright Medical announced in an 8-K SEC filing that Tornier had voluntarily withdrawn and refiled its HSR notification and report form relating to the proposed merger. The withdrawal and refiling of the form gives the FTC extra time to review the proposed transaction in the initial phase. The waiting period is now scheduled to expire on Wednesday, January 28, 2015, at 11:59 p.m., unless earlier terminated or a request for additional information or documentary materials is issued to either party prior to the expiration of the waiting period.

The companies announced the planned $3.3 billion merger in October 2014. Each share of Wright will be exchanged for 1.0309 shares of Tornier. Wright shareholders would retain 52% of the combined company.

The new company, Wright Medical N.V. will be headed by current Wright president and CEO Robert Palmisano. Tornier’s current president and CEO David Mowry is expected to become executive vice president and COO.

A withdrawal and refiling of FTC notification is not uncommon when FTC staff has raised some issues that the companies believe can be easily resolved with a little extra time.

Good Fourth Quarters

The two companies reported preliminary fourth quarter financial results the week of January 6.

Wright Medical’s revenue of $83 million was up 25% over the previous year’s fourth quarter on a constant currency basis. The revenue was in line with Wall Street expectations. Tornier, on the other hand, had much better than expected results with revenue of $93 million climbing 15% over the previous year’s fourth quarter on a constant currency basis. Tornier’s growth was driven by the Aequalis Ascend Shoulder line.

Management of both Tornier and Wright Medical told analysts they remain committed to the deal and continue to expect deal to close in the first half of 2015.

BMO Capital Market analyst Joanne Wuensch said she remains “bullish” on the deal which will create a broad-based extremities company, with $600 million-plus of revenue in 2014, increasing revenue in the low- to mid-teens, with the opportunity for $40-$45 million in cost-cutting opportunities.