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RTI Surgical Holdings, Inc.® Announces Sale of OEM Business and Preliminary Fourth Quarter and Full Year 2019 Revenues (press release)
Subsequent to Closing of the $490M Transaction, RTI Surgical Will Be a Global Pure Play Spine Company Targeting Double-Digit Growth
DEERFIELD, Ill., Jan. 13, 2020 (GLOBE NEWSWIRE) — RTI Surgical Holdings, Inc. (RTIX), a global surgical implant company, today announces a definitive agreement for the sale of the Company’s OEM business to Montagu Private Equity LLP (‘Montagu’), a leading European private equity firm, for a total consideration of $490 million. The transaction is targeted to close in the first half of 2020.
Transaction Overview
- RTI Surgical Holdings has agreed to sell its OEM business to Montagu, a leading European private equity firm, for $480 million in cash and certain other consideration, totaling $490 million
- The RTI Surgical Holdings Board of Directors unanimously approved the transaction
- The transaction is subject to approval from RTI Surgical Holdings’ shareholders, the customary regulatory approvals and the satisfaction of customary closing conditions, and is targeted to close in the first half of 2020
- Upon closure of the transaction, RTI Surgical Holdings will be a global pure play spine business focused on growth and innovation
- After closing, the OEM business will continue under a contractual relationship to support RTI in developing and manufacturing certain products in RTI’s product portfolio
- Proceeds from the transaction are currently expected to be used to repay indebtedness and to capitalize RTI Surgical Holdings for continued investment in its global spine portfolio
“The sale of the OEM business to Montagu completes the first phase of our strategic transformation to reduce complexity, drive operational excellence and accelerate the growth of RTI Surgical,” said Camille Farhat, President and CEO, RTI Surgical Holdings. “We are excited about this transaction, not only because of the value that is immediately created, but also because the OEM business is going to an experienced investor who understands the business and the expertise of the people and will support its growth and development.”
Mr. Farhat continued, “Following the transaction, we believe RTI will be a global pure play spine company with tremendous fundamentals and exciting long-term growth prospects. We estimate the spine business will have generated global revenues in the range of $118 million to $119 million with gross margins of approximately 75% in 2019. Immediately, post-transaction, the continuing business is expected to be debt-free and have approximately $175 million to $200 million of cash on the balance sheet to support its growth, which will be further driven by our Novel Therapies and an expected minimum of 10 new product introductions during each of the next two years.”
Olivier Visa, President of the OEM business commented, “We are thrilled about the sale of the OEM business to Montagu. We have built a world-class design, development and manufacturing competency with demonstrated expertise across tissue, biologics and hardware with a tremendous team and a customer base of leading medical technology companies. We are vested in continuing to build customer intimacy in service of our existing and future partners and continuing our legacy of serving more patients and maximizing the gift of donation. We look forward to working with Montagu in driving the growth of the business and deepening the significant expertise and core competencies we have developed to serve more patients.”
Guillaume Jabalot, Director, Montagu, said: “As a strong, resilient business that is well-positioned to capitalize on accelerated growth opportunities, RTI’s OEM business is an excellent fit for Montagu’s investment strategy. We look forward to working with Olivier and the team to support the business in this exciting next chapter of growth, maintaining its ethos of exceptional service and innovation.”
Preliminary Fourth Quarter and Full Year 2019 Results
For the fourth quarter of 2019, the Company expects to report revenues of $79 million to $80 million. In the quarter, OEM segment revenues are expected to be approximately $47 million and global Spine segment revenues are expected in the range of $32 million to $33 million primarily driven by solid progression of the Novel Therapies portfolio, delivering over 20% sequential growth compared to the third quarter 2019.
For the full year of 2019, the Company expects to report revenues of $307 million to $308 million. In the full year 2019, OEM segment revenues are expected to be approximately $189 million and global Spine segment revenues are expected in the range of $118 million to $119 million.
The Company will provide formal 2020 guidance for the global Spine business at the time of the transaction closing.
Piper Sandler acted as the exclusive financial advisor and rendered a fairness opinion to RTI Surgical Holdings, and Sidley Austin and Holland & Knight were RTI Surgical Holdings’ legal advisors on the transaction. Weil, Gotshal & Manges LLP acted as legal advisors to Montagu.
Conference Call
RTI will host a conference call and audio webcast at 8:30 a.m. ET on January 14, 2020. The conference call can be accessed by dialing (877) 383-7419 (U.S.) or (760) 666-3754 (International), using conference ID 3870628. The webcast can be accessed through the investor section of RTI’s website at www.rtix.com/investors. A replay of the conference call will be available on RTI’s website for one month following the call.
About RTI Surgical Holdings, Inc.
RTI Surgical Holdings is a leading global surgical implant company providing surgeons with safe biologic, metal and synthetic implants. Committed to delivering a higher standard, RTI’s implants are used in sports medicine, plastic surgery, spine, orthopedic and trauma procedures and are distributed in over 50 countries. RTI has four manufacturing facilities throughout the U.S. and Europe. RTI is accredited in the U.S. by the American Association of Tissue Banks and is a member of AdvaMed. For more information, please visit www.rtix.com. Connect with us on LinkedIn and Twitter.
About Montagu
Montagu Private Equity is one of Europe’s leading private equity firms and has been investing in businesses for over fifty years. Montagu’s investment strategy is focused on partnership with management in buyouts of high-quality companies operating in stable and growing sectors, providing products and services that their customers would otherwise badly miss. It develops a shared strategic vision with management and then provides the necessary financial, strategic and operational resources to help realize that vision and support growth. The firm currently has assets under management of approximately €4.3 billion. Montagu partners with companies with enterprise values between €200 million and €1 billion and has made over 400 investments over the last fifty years. For additional information on Montagu, please visit www.montagu.com.