Medtronic Sells ENT Instrument Lines to Integra LifeSciences

Plainsboro, N.J.-based Integra LifeSciences Holdings Corp. is buying Medtronic Inc.’s MicroFrance and Xomed manual ENT (ear, nose and throat) and laparoscopy instrumentation lines for approximately $60 million in cash.

Integra expects the transaction to close, subject to customary closing requirements, in the fourth quarter of this year.

The MicroFrance business, which includes Xomed’s manual ENT instruments, manufactures and sells reusable handheld instruments to ENT and laparoscopy surgical specialists. Under terms of the agreement, Integra will acquire a portfolio of approximately 4,000 MicroFrance and Xomed manual ENT and laparoscopic surgical instruments, as well as the manufacturing facility in St. Aubin le Monial, France.

Integra officials said they will fund the transaction with cash held outside the United States.

“This announcement reflects Integra’s commitment to building our Instruments business. The transaction provides access to R&D, service and repair and other infrastructure already in place in St. Aubin le Monial, France, which will improve our ability to service our current portfolio and to develop new products,” said Debbie Leonetti, president of Integra’s U.S. Instruments division. “These products also align nicely with our current sales channels as well as adjacent divisions, particularly our neurosurgery business.”

The addition of the MicroFrance business will expand Integra’s Instruments presence outside the United States, officials noted. In the most recent annual reporting period, sales from the products being acquired totaled approximately $30 million, two-thirds of which were generated outside the United States.

“We are excited about adding the MicroFrance business, which advances our strategic objectives in both our instruments and international businesses while meeting our profitability and return goals,” said Glenn Coleman, Integra’s chief financial officer.
Medtronic’s decision to sell, according to company officials and industry analysts, is part of a focus on higher-growth technologies.

“Our ENT division is increasingly focusing on novel therapies and innovative powered surgical, navigation and nerve monitoring technologies,” Medtronic spokeswoman Cindy Resman told the Minneapolis (Minn.) Star-Tribune. “As such, manual instrumentation is no longer a part of our longer-term strategy.”

Integra expects to record approximately $27 million to $30 million in revenue and approximately 10 cents of adjusted earnings per share in calendar 2015 from the acquisition. The earnings accretion should rise after the first year once certain sales transitions are complete. The company expects the acquisition to contribute less than $5 million in revenue and be neutral to earnings in the fourth quarter of 2014. Integra officials predict the transition and integration will be completed by the second half of 2015.

In August, Medtronic launched the NuVent EM Sinus Dilation device for its Fusion ENT Navigation System. According to Medtronic, NuVent is the “first and only” balloon sinus dilation system with built-in electromagnetic surgical navigation technology to help the surgeon confirm anatomy and optimize balloon placement during balloon sinus surgery. Surgeons can see the precise location of the NuVent instrument’s tip on the Fusion screen. Balloon sinus surgery may be used as part of the treatment of chronic sinusitis, a disease that affects nearly 29 million U.S. adults.