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Stryker Corp. (VITA) Announces Successful Acquisition of Orthovita, Inc.

MALVERN, PA — (Marketwire) — 05/16/11 — Orthovita, Inc. (NASDAQ: VITA), a spine and orthopedic biosurgery company, announced today that it has agreed to be acquired by Stryker Corporation for $3.85/share in cash in a transaction that results in the largest single upfront payment for an orthobiologics company. The purchase price represents a 58% and 67% premium to the 30 day and 60 day volume weighted average prices, for a total value transaction value of approximately $318 million.

In July 2007, Essex Woodlands Health Ventures Fund VII, LP (Essex Woodlands), managed a multi-faceted deal, which was spearheaded by Partner Scott Barry. Essex Woodlands proactively contacted the company about a transaction that would address a number of issues hindering the company’s growth and development. Essex Woodlands led an equity financing of $32.5M to remove the company’s capital overhang and became the largest shareholder of the company at the time. In addition, Essex Woodlands played a key role in negotiating the repurchase of an ongoing revenue interest obligation and in securing a $45M debt facility used to repurchase the revenue interest obligation. Essex Woodlands also recruited two highly experienced senior executives in Bill Tidmore, former president and chairman of Depuy, and Paul Thomas, former CEO of LifeCell Corporation, to the Board of Directors. During the 3 ½ years of Essex Woodlands’ investment, Orthovita became the leading independent orthobiologic company with its revenues growing from $58M to $94.7M and the company turned EBITDA and cash flow positive.

Antony Koblish, Orthovita President and CEO stated, “With the innovative financing initiatives which assisted our restructuring and recapitalization efforts exhibited by Essex Woodlands in general, and Scott Barry in particular, we aggressively and successfully pursued this transaction. Scott continued to significantly contribute to the company with his strong leadership and commitment to the Company, helping us work towards this successful outcome.”

Scott Barry commented, “At Orthovita, Inc., the team was committed to maximizing the value of Orthovita’s orthobiologic and surgery platforms. With this acquisition by Stryker Corporation, Orthovita will have in place an unprecedented level of resources that in combination with Stryker’s industry-leading sales and marketing team will allow for maximizing the potential of their products and existing pipeline.”

The acquisition of Orthovita, Inc. marks the third announced exit for Essex Woodlands within the past 30 days. The first exit was announced on April 18, 2011 for Prism Pharmaceuticals, an Essex Woodlands Health Ventures Fund VI, LP investment, which merged with Baxter International for $338M. Prism, which is owned 55% by Essex Woodlands and was formed in 2004, develops drugs for cardiovascular conditions. A second exit was announced by Essex Woodlands Health Ventures Fund VII, LP on April 21, 2011 by Healthcare Brands International (HBI). HBI, which develops OTC products, sold its Swedish subsidiary, Antula Healthcare, to Meda AB for SEK 1.8B (US$288M).

Stryker Corporation’s acquisition of Orthovita, Inc. marks the fourth growth equity exit and sixth overall exit of Essex Woodlands’ portfolio over the past 15 months. Prior growth equity exits include BioForm, which was acquired by Merz Pharma Group on February 16th, 2010 for an enterprise value of $300M, followed by ATS Medical, which was acquired by Medtronic on April 29th, 2010 for an enterprise value of $370M. Growth equity investments in China also exhibited strong results: China Cord Blood Corporation went public November 30th, 2009 and MicroPort Scientific Corporation completed its IPO on the Hong Kong Stock Exchange, raising $200M on September 24, 2010.

About Essex Woodlands
With $2.5 billion under management, Essex Woodlands is one of the largest and oldest venture capital and private equity firms pursuing investments in pharmaceuticals, biotechnology, medical devices, health care services, and health information technology. Since its founding in 1985, Essex Woodlands has maintained its singular commitment to the healthcare industry and has been involved in the founding, investing, and/or management of over 100 healthcare companies ranging across all sectors, stages and geography. The team is comprised of 25 senior investment professionals with offices in Palo Alto, Houston, New York and London.

Monday, May 16th, 2011 Uncategorized
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