Spinal technology leader NuVasive is fusing with another leader in orthopedics to create a company with the backbone to dominate the $50 billion global musculoskeletal market.
On Feb. 9, San Diego-based NuVasive announced it was combining with Globus Medical in an all-stock transaction. Under the terms of the agreement, unanimously approved by the boards of directors of both companies, NuVasive (NASDAQ: NUVA) shareholders will receive 0.75 of a share of Globus Medical (NYSE: GMED) stock for each share of NuVasive stock owned at the closing of the transaction.
Based on this exchange ratio, the agreement values NuVasive shares at $57.72, giving the deal an equity value of $3.1 billion. Following the closing of the transaction, expected to come in the middle of this year, NuVasive shareholders will own approximately 28% of the combined company.
The $57.72 price for NuVasive stock is roughly 20% higher than the $45 per share price the company logged on Feb. 8, the day the deal was announced. Globus Medical ended trading on Feb. 8 at just under $77 a share but closed Feb. 9 at $62.
NuVasive’s innovative spinal technologies, which offer less invasive, procedurally integrated surgical solutions for a variety of spinal injuries, is a complement to Globus Medical’s products that enable surgeons to promote healing in patients with musculoskeletal disorders.
“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,” Scavilla added. “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.”
In addition to combining two complementary technologies and medical solutions, the combined company also fuses together two strategies for global reach. Together, Globus Medical and NuVasive will have a presence in more than 50 countries with more than 5,000 employees. And the new organization’s larger commercial sales organization will enable it to further penetrate existing and future markets, reaching more surgeons and patients around the world.
Globus Medical and NuVasive will also benefit from their respective operational advantages — including Globus Medical’s in-house manufacturing capacity and NuVasive’s global distribution networks, which includes its Memphis-based global distribution center.
“Our combination with Globus Medical is transformative, joining two companies with highly complementary capabilities, geographic footprints and customer bases,” said Chris Barry, chief executive officer of NuVasive. “Together, we will be able to offer an exceptional portfolio of clinically proven solutions, supported by strong commercial and surgeon education teams. The new company will be well-positioned to deliver value creation for shareholders, further support our surgeon partners—and most importantly, change the lives of more patients.”
Strong Revenue Potential
Both companies also have complementary histories of delivering strong revenue numbers. According to the statement announcing the merger, the combined company is aiming to deliver a “mid-30% EBITDA profile over the next three years.”
According to Michael Farrington, chief people and culture officer at NuVasive, the name of the new company will be announced some time before the close of the deal in the middle of this year.
Along with the new moniker will come changes in leadership roles at the company.
Upon closing of the transaction, the combined company will have an eleven-member board composed of all eight directors from Globus Medical’s board and three directors from NuVasive’s board.
David Paul, chairman of the Globus Medical board of directors, will serve as chairman of the combined company’s board of director; Scavilla will serve as the new company’s CEO and as a member of the board; Keith Pfeil, chief financial officer of Globus Medical, will serve as CFO of the combined company.
The future roles of Barry and other executives at NuVasive and how they fit into the organizational design and leadership structure is “not defined,” Farrington said, adding that “NuVasive and Globus leadership will be actively involved in integration planning, including Chris Barry — who will support integration planning as well.”
As for the staff in San Diego and at other NuVasive offices, Farrington predicts the teams will grow following the merger.
“As the combined company achieves even higher levels of growth and success, we firmly believe the combination will create opportunities for career advancement for current Globus Medical and NuVasive employees and be a talent destination to attract new employees,” he said. “Following the close of the transaction, we will maintain an operating presence that is strategically located to best support our customers and innovation, including in San Diego; Memphis, and West Carrollton, Ohio, in addition to other key cities and geographies.”
The new company will also continue to prioritize R&D investment. “We see the opportunity to combine talent from both organizations,” Farrington added.
CEO: Chris Barry
Headquarters: Sorrento Valley
Business: Largest spine-focused technology company in the world
Stock: NUVA (NASDAQ)
Revenue: $1.1 billion (2021)
Notable: NuVasive operates in more than 50 countries serving surgeons, hospitals, and patients.
CEO: Dan Scavilla
Headquarters: Audubon, Pennsylvania
Business: Musculoskeletal medical device manufacturer
Stock: GMED (NYSE)
Revenue: $959 million (2021)
Notable: Globus Medical is the fastest growing company in the history of orthopedics.