Integra LifeSciences
(Nasdaq: IART)
announced today that it entered into a definitive agreement to acquire Acclarent from Johnson & Johnson MedTech.
Acclarent, part of J&J MedTech’s Ethicon unit, enhances Integra’s position in the ear, nose and throat (ENT) treatment market. Integra already offers the MicroFrance line of ENT instruments. The company believes that, upon closing, the deal propels it into a position as a leading provider of ENT products and technologies.
Integra agreed to acquire Acclarent for $275 million in cash at closing. The deal also includes an additional $5 million upon the achievement of regulatory milestones.
“This acquisition presents Integra with a rare opportunity to become a key player in the ENT segment. Acclarent’s culture of pioneering technologies aligns with Integra’s legacy of innovation to transform care and restore patients’ lives,” said Jan De Witte, president and CEO of Integra LifeSciences. “We are looking forward to welcoming the Acclarent employees to the Integra team. Together, we can make a profound impact on the future of ENT and neurosurgery.”
Acclarent’s portfolio features groundbreaking balloon technologies for sinus dilation and eustachian tube dilation. The Irvine, California-based company also offers surgical surgical navigation systems. Its U.S. product sales generated about $110 million in 2022.
Integra expects to close the transaction by the second quarter of 2024. Acclarent will join Integra’s Codman Specialty Surgical (CSS) division.
“The ENT segment is an anatomical adjacency to neurosurgery. For example, this acquisition will provide opportunities for ENT and neurosurgeons to closely collaborate on tumor care using skull base approaches,” said Mike McBreen, president of the CSS division. “Acclarent’s strong commercial capabilities, R&D expertise, advanced portfolio and deep clinical knowledge will be important assets to Integra, allowing us to deliver future innovation not only within ENT, but also across our other CSS technology platforms.”
The analysts’ view
BTIG analysts Ryan Zimmerman and Iseult McMahon wrote in a report that Integra management highlighted Acclarent’s portfolio diversity as a key reason to pursue the acquisition. That portfolio includes navigation and instrumentation outside of the key balloon sinus dilation products. However, the analysts said it remains unclear which proportion of sales are tied to elective balloon sinus dilation and what’s newer.
Zimmerman and McMahon view synergies as “less obvious” in this deal and expect the need for an entirely separate sales force.
They see cross-sell opportunities with ENT instrumentation and the rest of Integra’s CSS portfolio. But, with navigation and shaver products going up against the established likes of Medtronic and Stryker in the market, the analysts remain unsure.
BTIG maintains its “Neutral” rating on Integra but notes that the $275 million deal “isn’t a bad price.” Johnson & Johnson bought Acclarent in 2010 for $785 million, to compare.