Medical Device Daily

Wanting to expand its portfolio of reconstructive foot and ankle products, Wright Medical Group (Arlington, Tennessee) reported yesterday that it has agreed to acquire the reconstructive foot surgery business of Darco International (Huntington, West Virginia) for about $17 million in cash.

CFO John Bakewell, told Medical Device Daily that Wright Medical is focused on the foot and ankle sector and he called Darco’s line “an ideal complement to our already broad portfolio of reconstructive foot and ankle products.”

Bakewell said the deal is expected to close in the early part of the second quarter.

Darco’s reconstructive product line consists of procedure-specific plating systems, including the MRS (Modular Rearfoot), MFS (Modular Forefoot) and FRS (Forefoot Reconstructive) systems. These three systems offer a combined 10 different plating options and specialized screw fixation systems for use in advanced reconstructive foot procedures, the company said.

Darco’s reconstructive foot surgery business generated sales of roughly $6 million in 2006 with the majority in Germany. Wright said it will introduce the entire Darco foot and ankle product portfolio to the U.S. upon completion of this transaction.

Wright said that the combination of Darco’s procedure-specific plating systems with the company’s line of products and biologic solutions provides it with the broadest portfolio of foot and ankle products in the industry.

Gary Henley, president/CEO of Wright, said the acquisition “provides an opportunity to leverage our distribution network both within and outside the U.S., and establishes a leading foot and ankle presence for Wright in the large and robust German marketplace. The combination of these procedure-specific plating systems from Darco with our flagship Charlotte line creates what we believe will be the most comprehensive foot reconstructive product offering available,” Henley said.

The acquisition is expected to be neutral to Wright’s adjusted earnings, which exclude acquisition-related costs such as integration charges and non-cash inventory step-up expenses, during the remainder of 2007, and accretive to Wright’s earnings thereafter, the company said.

“Wright Medical’s strong reputation and experience in foot and ankle reconstruction make it the ideal owner for the Darco reconstructive product line,” said Darrel Darby, president of Darco. “Through Wright Medical, even greater numbers of surgeons and patients will have access to the benefits of the Darco family of reconstructive products.”

The deal comes on the heels of an agreement Wright signed last month with Regeneration Technologies (RTI; Alachua, Florida), a processor of orthopedic and other biologic implants, to develop xenograft implants for use in foot and ankle surgeries. Wright will design and distribute the implants, while RTI will develop, manufacture and supply Wright’s designs. Wright will market the implants under the Cancello-Pure brand (Medical Device Daily, Feb. 13, 2007).

Darco provides surgical, trauma and wound care solutions to the global foot and ankle community.

In other dealmaking news:

• China Medical Technologies (Beijing), a company developing advanced in-vitro diagnostic systems and tumor therapy systems, said it completed its previously reported acquisition of a fluorescent in situ hybridization (FISH) business (MDD, Feb. 8, 2007). The acquisition is expected to diversify the company’s portfolio and complement its existing ECLIA diagnostic products by providing tests for the diagnosis of prenatal and postnatal disorders as well as various cancers, the company said.

The new business will strengthen China Medical’s position in diagnostic testing in China, the company said.

Final consideration for the acquisition is $136.8 million in cash with a further $40 million payable in cash or, at the company’s option, shares in the company, upon the achievement of certain milestones, the most important being the generation of $20 million in revenue from FISH products in the first year after closing.

The company said the transaction will be accretive in FY08 and beyond.

• Tripos (St. Louis) reported that Institutional Shareholder Services (ISS), the leading independent proxy advisor to the institutional marketplace, recommended that its shareholders vote for the proposed sale of its Discovery Informatics business to Vector Capital and for the proposed plan of liquidation and dissolution. These proposals will be presented at the March 15 special meeting of Tripos shareholders.

In recommending for the asset sale, the ISS said, “Based on our review of the comprehensive sale process, the impending need for the company to raise funds to meet debt obligations, and the declining trend in core business, we recommend shareholders support the asset sale proposal.”

Tripos provides drug discovery informatics products and services and chemistry research.

• Modern Medical Modalities (MODM; Union, New Jersey), a healthcare management and diagnostic imaging services company, has agreed to acquire the medical software assets of MTI-II Partners in exchange for 1 million shares of MODM’s common stock, based on the closing market price of 73 cents a share as of Feb. 14 The transaction is expected to close this month.

MODM said it believes the acquisition of MTI-II’s medical software will enhance its enterprise-wide Management Services System that covers administrative, clinical, financial and decision support processes.

MODM’s management services include procuring equipment, billing and reimbursement services, managed care contracts, human resources, inventory management, and medical record administration/transcriptions.