Globus Medical (NYSE:GMED) and NuVasive (Nasdaq:NUVA) today announced an agreement to combine in an all-stock transaction.
The two musculoskeletal technology companies share a vision focused on improving patient care, according to a news release.
Under the terms of the agreement — which both companies’ boards unanimously approved — NuVasive shareholders receive 0.75 of a share of Globus Class A common stock for each share of NuVasive common stock owned at closing. Based on the exchange ratio, the implied share price for NuVasive totals $57.72. That amounts to an equity value of $3.1 billion.
Following the closing of the transaction, 28% of ownership goes to NuVasive shareholders. Meanwhile, the remaining 72% belongs to Globus shareholders on a fully diluted basis.
NuVasive CEO Chris Barry said the companies share “complementary capabilities, geographic footprints and customer bases.”
“This transaction reflects our mission to become the leading musculoskeletal technology company in the world by developing products that promote healing in patients with musculoskeletal disorders,” said Dan Scavilla, president and CEO of Globus Medical. “With NuVasive, we can help support more patients through leading innovation and expanding our commercial reach to provide superior service to our surgeon and hospital partners. We look forward to combining the NuVasive and Globus Medical teams to capitalize on the many opportunities to improve patient care and create sustainable shareholder value.”
Globus, NuVasive lay out the benefits of their combination
The companies said the transaction accelerates their strategies to target the $50 billion musculoskeletal market. That includes spine, orthopedics, enabling technology, power tools, biologics and more.
Globus and NuVasive bring a combined presence in more than 50 countries with more than 5,000 employees. They feel a larger sales organization enables further penetration into existing and future markets.
Additionally, Globus and NuVasive said their complementary products enable the creation of a comprehensive, innovative portfolio. They also each bring “respective operational advantages,” including Globus’ manufacturing capacity and NuVasive’s distribution networks.
Other benefits include upside revenue potential and strong financial profiles and value creation opportunities.
How the combined company operates
Upon closing, the combined company is set to feature an 11-member board. It includes all eight directors from Globus’ board and three from NuVasive’s.
The agreement sees David Paul, Globus board chair, set to serve as chair of the combined company’s board. Scavilla takes on the role of CEO, while the company picked Globus CFO Keith Pfeil for the same role at the combined company.
NuVasive CEO Chris Barry “will support integration planning of the combined company.”
Timeline and financial outlook
Globus and NuVasive expect the transaction to close in the middle of this year. It remains subject to shareholder approval from both sides, regulatory approval and other customary conditions.
Both companies confirmed preliminary fiscal year-end results as part of the merger announcement. Globus projects 6.8% sales growth and NuVasive anticipates 5.5% revenue growth for the full year.
Ahead of 2023, Globus expects to improve sales by at least 7% and NuVasive expects to grow by at least 6%.
Shares of GMED dropped 15% at $65.39 apiece after the market opened today. NUVA shares rose 5.1% at $48.10 apiece.