Mako Shareholders Approve Merger with Stryker

Mako Surgical Corp. stockholders overwhelmingly have approved the company’s merger with orthopedic device behemoth Stryker Corp.

Under the terms of the merger agreement, Mako Surgical stockholders will receive $30 per share in cash when the deal closes on Dec. 17. The transaction, not including acquisition and integration costs, is expected to dilute Stryker’s adjusted earnings by 10 cents to 12 cents a share in the first year, be neutral in the second year and accelerate growth thereafter. Stryker said Mako will issue an additional 3.953 million shares for an acquisition Mako expects to complete.

Stryker Chief Executive Officer Kevin Lobo said the addition of Mako’s technology to his company’s joint reconstruction and surgical instrumentation portfolio will spur the growth of robotic assisted surgery.

“Mako has established a technology platform in robotic-assisted surgery which we believe has considerable long-term potential in joint reconstruction,” he said when the $1.65 billion deal was announced in late September. “Our combined expertise offers the potential to simplify joint reconstruction procedures, reduce variability and enhance the surgeon and patient experience.”

The deal is likely to signal the start of additional industry consolidation, analysts claim. “We anticipate the transaction will drive the other M&A medtech targets’ stock prices higher, as the musical chairs move in consolidation has begun,” BMO Capital Markets analyst Joanne Wuensch wrote in a note to investors.

Founded in 2004, Mako pioneered the use of robotic- assisted surgery in orthopedics. It sells the Rio Robotic Arm, which enables surgeons to precisely and consistently cut through bone. The incisions are designed for the company’s Restoris implants, including partial knee resurfacing in people with early or mid-stage osteoarthritis. Mako recently added an application for total hip replacements.

“The take-out price seems high, but strategically it makes a lot of sense,” Wuensch said. “For Stryker, the company takes a step forward into robotic surgery, consolidates its orthopedic silo, and continues its M&A strategy that it has been on for several years.”
Mako subsequently will be delisted from the Nasdaq after the merger is complete.