Medical Device Daily Executive Editor

Synovis Life Technologies (St. Paul, Minnesota) yesterday reported that it has agreed to sell substantially all assets of its interventional business to Heraeus Vadnais (Vadnais Heights, Minnesota), and related entities, for $29.5 million in cash, plus assumption of certain liabilities.

Synovis said it expects the spin-off to give it a pretax gain of $11 million to $12 million.

Besides putting additional dollars in its coffers, the spin-off allows Synovis to put total focus on its biosurgical products, Rich Kramp, president/CEO of Synovis, told Medical Device Daily.

“We’ve been having a busy day – a good busy,” Kramp said, taking time from meetings with company staff and investors. “It’s key that we will now devote all of our focused efforts going on to our surgical business.”

Kramp said that it has been developing soft-tissue repair and surgical-buttressing products since 1985 and that this business grew from $27 million in 2006 to $38 million in 2007.

He said that the interventional business is a contract manufacturing operation – primarily the designing and manufacturing micro-wires, molded polymer and micro-machined components, mainly for cardiac rhythm management firms and other medical markets – but that it was difficult controlling the ups and downs in those sectors.

“There was a lot of volatility in that end market ... It’s hard to be a private company with that much volatility,” Kramp said.

He said that the company’s primary products are tissue-based for improving surgical outcomes in three areas: gastric bypass/bariatric surgery, vascular repair during brain surgery, and the general surgical market of hernia repair.

“As a pure play, we’ll have much more control of our destiny,” Kramp told MDD.

He added that the company will now also be looking at acquisitions in the biosurgical sectors. “Certainly we’re looking at acquisitions that will complement our sales call point,” he said. “We have a fairly active acquisition program, but nothing to announce at this point.”

The boards of both companies have approved the transaction, which is expected to close Jan. 31.

Kramp called Heraeus “an excellent buyer” that will offer positions to its employees in Lino Lakes, Minnesota, and Puerto Rico.

Dr. Roland Gerner, managing director of W. C. Heraeus, the largest business segment of the Heraeus Group (Hanau, Germany) and parent of Heraeus Vadnais, said the purchase strengthens “our strategically important Medical Components Division and our market share in the med-tech industry in the U.S. as well as in Puerto Rico ...”

Heraeus Vadnais specializes in medical components within the Heraeus Group, a global, private company active in the businesses of precious metals, sensors, dental health, quartz glass, and specialty lighting sources.

In other dealmaking activity:

• Elekta (Stockholm, Sweden) yesterday reported that it is in “exclusive negotiations” to acquire CMS (St Louis) for $75 million in cash.

Elekta describes CMS as a “world leader” in the development of advanced radiation therapy planning (RTP) solutions, its client base consisting of more than 1,500 sites in clinical operation throughout the world. CMS is owned by a private equity fund managed by Brown Brothers Harriman.

The transaction is subject to concluding various conditions, with the negotiations expected to be finalized by mid-February and closing estimated by mid-March.

CMS has been developing RTP systems for over 25 years and “continues to be a leader in treatment planning and oncology workflow management,” Elekta said in a statement.

Elekta said the acquisition would give it a suite of “advanced RTP systems, a large and growing installed base, and a well-established RTP operational infrastructure” to add to its oncology business. It bills CMS as “the market leader” in treatment planning for proton therapy, with eight installations in clinical use.

It said it will integrate these solutions with its Mosaiq information management system to build its leadership in software systems for proton therapy facilities and strengthen its partnering collaborations.

Tomas Puusepp, president/CEO of Elekta, said, “The products and market position of CMS are highly complementary to Elekta’s corporate structure, technology portfolio, and R&D roadmap ... With CMS in the Elekta Group, we will also gain relationships with a large number of customers who do not use Elekta’s products today.”

James Hoey, executive VP, product creation at Elekta, and CEO of Impac Medical Systems (Sunnyvale, California), an Elekta company, said, “Elekta recognizes that treatment planning is rapidly evolving from an event that typically occurred in an isolated area one or two times during the therapy process to becoming a more iterative process that evolves throughout the course of therapy with various steps taking place in different areas of the department. Our aggressive development of Mosaic RTP as the world’s first distributed toolset for advanced radiation therapy is targeted to meet this growing demand.”

CMS has 290 employees, and reports that in FY07 it grew order intake by 21% to $61 million.

• Greatbatch (Clarence, New York) said it has completed its previously reported purchase of P Medical Holding (d.b.a. Precimed; Orvin, Switzerland/Exton, Pennsylvania), a supplier of orthopedic technology, and a deal moving Greatbatch into the orthopedics arena.

Greatbatch paid roughly CHF 123 million in cash ($125 million) for Precimed’s outstanding shares and will pay additional earnings-based milestones of up to CHF 12 million in 2009.

The deal was first disclosed last November (Medical Device Daily, Nov. 28, 2007).

Greatbatch acquired Precimed’s rights and obligations under an agreement to acquire the operations of another company, unnamed, in the orthopedic industry, that transaction expected to close early 2008.

Precimed has manufacturing operations in Switzerland and Indiana and sales offices in Japan, Asia and the UK. Its products, including instrumentation for hip and knee replacement, trauma and spine, are sold worldwide to leading orthopedic customers.

Greatbatch manufactures medical device components for the cardiac rhythm management, neurostimulation, vascular, orthopedic and interventional radiology markets.