Orthofix and SeaSpine Decide to Merge

Orthofix Medical Inc. and SeaSpine Holdings Corporation announced this week that they have entered into a definitive agreement to combine in an all-stock merger of equals. If approved by both sets of shareholders, the Orthofix group would own approximately 57% of the combined company, SeaSpine shareholders would own 43%.

The two companies would also adopt a new name, yet to be determined.

Prior to the announcement, the two companies, combined, were trading at a $600 million market value. Post announcement, that value dropped 14% to $517 million.

According to Orthofix, “SeaSpine shareholders will receive 0.4163 shares of Orthofix common stock for each share of SeaSpine common stock owned.”

Wall Street’s analysts have been uniformly positive. Wells Fargo analysts estimated that combined 2022 sales for the companies would be about $700 million with a projected ~$1 billion in revenue within three years of the close of the deal. In their view, “the deal makes sense,” because it would “give both companies much needed scale and distribution to compete with larger, pure-play competitors like NUVA [NuVasive, Inc.] and GMED [Globus Medical Inc.].

The transaction is expected to close in the first quarter of 2023, “subject to approval by both companies’ shareholders and customary closing conditions and regulatory approvals.” The combined company is expected to be named before the transaction’s closing.

Orthofix also added that the combined companies would be a “leading global spine and orthopedics company with highly complementary portfolios of biologics, innovative spinal hardware, bone growth therapies, specialized orthopedic solutions and a leading surgical navigation system.”

Both Orthofix President and CEO Jon Serbousek and SeaSpine President and CEO Keith Valentine would remain at the combined company. Serbousek will serve as executive chairman of the board of directors and Valentine will serve as president and chief executive officer and member of the board of directors.

Serbousek and Valentine have both worked in the spine industry for many years. This will be their first time working together. OTW was able to speak with both executives about the merger.

Serbousek told OTW, “The merger of Orthofix and SeaSpine will bring about a larger, stronger company that will be better positioned to offer innovative products and expanded services to physicians and patients worldwide.”

Serbousek continued, “Our product lines are highly complementary, and we expect the broad biologics offering and the Flash™ Navigation System with 7D technology should provide significant cross-selling opportunities through U.S. and International spine and orthopedics channels.”

Valentine explained to OTW, “By integrating the two companies’ product portfolios we will be able to maximize our impact and advance our leadership position in the market.”

Valentine continued, “The financial strength and trajectory of the two companies, including the expected cost synergies, will give the merged company the combined scale, profitability, cash flow and growth profile otherwise unachievable by either company independently.”