RTI Surgical Holdings, Inc. (Nasdaq: RTIX), a global surgical
implant company, today announces a definitive agreement for the
sale of the Company’s OEM business to Montagu Private Equity LLP
(‘Montagu’), a leading European private equity firm, for a total
consideration of $490 million. The transaction is targeted to close
in the first half of 2020.
Transaction Overview
- RTI Surgical Holdings has agreed to sell its OEM business to
Montagu, a leading European private equity firm, for $480 million
in cash and certain other consideration, totaling $490
million
- The RTI Surgical Holdings Board of Directors unanimously
approved the transaction
- The transaction is subject to approval from RTI Surgical
Holdings’ shareholders, the customary regulatory approvals and the
satisfaction of customary closing conditions, and is targeted to
close in the first half of 2020
- Upon closure of the transaction, RTI Surgical Holdings will be
a global pure play spine business focused on growth and
innovation
- After closing, the OEM business will continue under a
contractual relationship to support RTI in developing and
manufacturing certain products in RTI’s product
portfolio
- Proceeds from the transaction are currently expected to be used
to repay indebtedness and to capitalize RTI Surgical Holdings for
continued investment in its global spine portfolio
“The sale of the OEM business to Montagu completes the first
phase of our strategic transformation to reduce complexity, drive
operational excellence and accelerate the growth of RTI Surgical,”
said Camille Farhat, President and CEO, RTI Surgical Holdings. “We
are excited about this transaction, not only because of the value
that is immediately created, but also because the OEM business is
going to an experienced investor who understands the business and
the expertise of the people and will support its growth and
development.”
Mr. Farhat continued, “Following the transaction, we believe RTI
will be a global pure play spine company with tremendous
fundamentals and exciting long-term growth prospects. We estimate
the spine business will have generated global revenues in the range
of $118 million to $119 million with gross margins of approximately
75% in 2019. Immediately, post-transaction, the continuing business
is expected to be debt-free and have approximately $175 million to
$200 million of cash on the balance sheet to support its growth,
which will be further driven by our Novel Therapies and an expected
minimum of 10 new product introductions during each of the next two
years.”
Olivier Visa, President of the OEM business commented, “We are
thrilled about the sale of the OEM business to Montagu. We have
built a world-class design, development and manufacturing
competency with demonstrated expertise across tissue, biologics and
hardware with a tremendous team and a customer base of leading
medical technology companies. We are vested in continuing to build
customer intimacy in service of our existing and future partners
and continuing our legacy of serving more patients and maximizing
the gift of donation. We look forward to working with Montagu in
driving the growth of the business and deepening the significant
expertise and core competencies we have developed to serve more
patients.”
Guillaume Jabalot, Director, Montagu, said: “As a strong,
resilient business that is well-positioned to capitalize on
accelerated growth opportunities, RTI’s OEM business is an
excellent fit for Montagu’s investment strategy. We look forward to
working with Olivier and the team to support the business in this
exciting next chapter of growth, maintaining its ethos of
exceptional service and innovation.”
Preliminary Fourth Quarter and Full Year 2019
Results
For the fourth quarter of 2019, the Company expects to report
revenues of $79 million to $80 million. In the quarter, OEM segment
revenues are expected to be approximately $47 million and global
Spine segment revenues are expected in the range of $32 million to
$33 million primarily driven by solid progression of the Novel
Therapies portfolio, delivering over 20% sequential growth compared
to the third quarter 2019.
For the full year of 2019, the Company expects to report
revenues of $307 million to $308 million. In the full year
2019, OEM segment revenues are expected to be approximately $189
million and global Spine segment revenues are expected in the range
of $118 million to $119 million.
The Company will provide formal 2020 guidance for the global
Spine business at the time of the transaction closing.
Piper Sandler acted as the exclusive financial advisor and
rendered a fairness opinion to RTI Surgical Holdings, and Sidley
Austin and Holland & Knight were RTI Surgical Holdings’ legal
advisors on the transaction. Weil, Gotshal & Manges LLP acted
as legal advisors to Montagu.
Conference CallRTI will host a conference call
and audio webcast at 8:30 a.m. ET on January 14, 2020. The
conference call can be accessed by dialing (877) 383-7419 (U.S.) or
(760) 666-3754 (International), using conference ID 3870628. The
webcast can be accessed through the investor section of RTI’s
website at www.rtix.com/investors. A replay of the conference call
will be available on RTI’s website for one month following the
call.
About RTI Surgical Holdings, Inc.RTI Surgical
Holdings is a leading global surgical implant company providing
surgeons with safe biologic, metal and synthetic implants.
Committed to delivering a higher standard, RTI’s implants are used
in sports medicine, plastic surgery, spine, orthopedic and trauma
procedures and are distributed in over 50 countries. RTI has four
manufacturing facilities throughout the U.S. and Europe. RTI is
accredited in the U.S. by the American Association of Tissue Banks
and is a member of AdvaMed. For more information, please visit
www.rtix.com. Connect with us on LinkedIn and Twitter.
About MontaguMontagu Private Equity is one of
Europe’s leading private equity firms and has been investing in
businesses for over fifty years. Montagu’s investment strategy is
focused on partnership with management in buyouts of high-quality
companies operating in stable and growing sectors, providing
products and services that their customers would otherwise badly
miss. It develops a shared strategic vision with management and
then provides the necessary financial, strategic and operational
resources to help realize that vision and support growth. The firm
currently has assets under management of approximately €4.3
billion. Montagu partners with companies with enterprise values
between €200 million and €1 billion and has made over 400
investments over the last fifty years. For additional information
on Montagu, please visit www.montagu.com.
Forward-Looking StatementsThis communication
contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, which may include
statements regarding the impact of operational priorities on costs
and their impact on RTI Surgical Holdings’ financial performance,
RTI Surgical Holdings’ ability to meet its financial and other
commitments, the implementation of RTI Surgical Holdings’ strategic
initiatives, RTI Surgical Holdings’ ability to expand the number of
patients it is able to serve, the impact of the transition from
map3® to ViBone®, our growth strategy in spine, the expected
integration of, and potential financial impact from various
acquisitions, the success of our new product development and
commercialization efforts, anticipated financial results, growth
rates, future operational improvements, fiscal 2019 guidance and
underlying assumptions, shareholder and regulatory approvals and
the completion of the transaction. In particular, comments about
RTI Surgical Holdings’ fundamentals and long-term growth prospects
of RTI Surgical Holdings’ Spine business are forward-looking
statements, as are expectations concerning fourth quarter 2019
revenues and the expected performance of Novel Therapies.
These forward-looking statements are based on management’s current
expectations, estimates and projections about our industry, our
management's beliefs and certain assumptions made by our
management. Words such as "anticipates," "expects," "intends,"
"plans," "believes," "seeks," "estimates," variations of such words
and similar expressions are intended to identify such
forward-looking statements. The forward-looking statements are not
guarantees of future performance and are based on certain
assumptions including RTI Surgical Holdings’ ability to effectively
manage expenses and accomplish its goals and strategies, the
quality of the new product offerings from RTI Surgical Holdings,
general economic conditions, as well as those within RTI Surgical
Holdings’ industry, RTI Surgical Holdings’ ability to integrate
acquisitions into existing operations, and numerous other factors
and risks identified in the Company’s Form 10-K for the fiscal year
ended December 31, 2018 and other filings with the Securities and
Exchange Commission (SEC). Our actual results may differ materially
from the anticipated results reflected in these forward-looking
statements. Important factors that could cause actual results to
differ materially from the anticipated results reflected in these
forward-looking statements include risks and uncertainties relating
to the following: (i) the risk that RTI Surgical Holdings may be
unable to obtain shareholder approval for the proposed transaction
or that RTI Surgical Holdings or Montagu may be unable to obtain
regulatory approvals required for the proposed transaction, or
required regulatory approvals may delay the proposed transaction;
(ii) the risk that a condition to the closing of the proposed
transaction may not be satisfied; (iii) the risk that the
occurrence of an event that could give rise to termination of the
definitive agreement; (iv) the risk that shareholder litigation in
connection with the proposed transaction may affect the timing or
occurrence of the proposed transaction or result in significant
costs of defense, indemnification and liability; (v) the timing to
consummate the proposed transaction; (vi) the effect of the
announcement or disruption from the proposed transaction making it
more difficult to retain and hire key personnel and maintain
relationships with customers, suppliers and other third parties;
(vii) the diversion of management time and attention on the
proposed transaction; (viii) general worldwide economic conditions
and related uncertainties; (ix) the effect and timing of changes in
laws or in governmental regulations; and (x) other risks described
in our public filings with the SEC. Additional risks and
uncertainties will be discussed in the proxy statement and other
materials that RTI Surgical Holdings will file with the SEC in
connection with the proposed transaction. There can be no
assurance that the proposed transaction will be completed, or if it
is completed, that it will close within the anticipated time period
or that the expected benefits of the proposed transaction will be
realized. These factors should be considered carefully and
undue reliance should not be placed on the forward-looking
statements. Each forward-looking statement in this
communication speaks only as of the date of the particular
statement. Copies of the Company's SEC filings may be
obtained by contacting the Company or the SEC or by visiting RTI's
website at www.rtix.com or the SEC's website at www.sec.gov. We
undertake no obligation to update these forward-looking statements
except as may be required by law.
Important Additional Information and Where to Find
It The proposed transaction will be submitted to the
shareholders of RTI Surgical Holdings for their
consideration. In connection with the proposed transaction,
RTI Surgical Holdings will file a proxy statement and other
materials with the SEC. This communication is not a
substitute for the proxy statement or any other document that RTI
Surgical Holdings may send to its shareholders in connection with
the proposed transaction.
RTI SURGICAL HOLDINGS SHAREHOLDERS ARE ADVISED TO READ
THE PROXY STATEMENT FOR THE PROPOSED TRANSACTION WHEN IT IS FILED,
AND ANY AMENDMENT OR SUPPLEMENT THERETO THAT MAY BE FILED, WITH THE
SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT RTI
SURGICAL HOLDINGS AND THE PROPOSED TRANSACTION. All such
documents, when filed, are available free of charge at the SEC’s
website, www.sec.gov, from the Company at its website,
www.rtix.com, or by contacting the Company’s Investor Relations at
(847) 530-0249.
Participants in SolicitationRTI Surgical
Holdings and its respective directors and executive officers may be
deemed to be participants in the solicitation of proxies in respect
of the proposed transaction. Information concerning RTI Surgical
Holdings’ participants is set forth in the proxy statement, filed
March 25, 2019, for the Company’s 2019 annual meeting of
stockholders as filed with the SEC on Schedule 14A. Additional
information regarding the interests of such participants in the
solicitation of proxies in respect of the proposed transaction will
be included in the proxy statement and other relevant materials to
be filed with the SEC when they become available.
Media and Investor ContactMolly
Poarchmpoarch@rtix.com+1 224 287 2661
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