Eric Major’s comments on the Globus + Nuvasive merger.

Written by Wells Fargo as an Equity Research piece on April 17, 2023.


May2023 – Not so fast! The FTC is taking a closer look at M&A antitrust.

The FTC has asked Globus Medical and Nuvasive to provide more information about the merger, including information about their market share, their pricing practices, and their research and development activities. The FTC is also considering whether the merger would harm patients by reducing their choices of doctors and hospitals.

The FTC is expected to make a decision on whether to approve the merger within the next few months. If the FTC does not approve the merger, it could block the deal and prevent Globus Medical and Nuvasive from merging.

Here are some additional details about the FTC’s review of the merger:

  • The FTC’s review is being conducted under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
  • The FTC has 30 days from the date of the merger announcement to request additional information from Globus Medical and Nuvasive.
  • The FTC can also request that the companies delay the closing of the merger.
  • The FTC has 90 days from the date of the merger announcement to make a decision on whether to approve the merger.
  • If the FTC does not approve the merger, it can file a lawsuit in federal court to block the deal.

Takeaways from Industry Expert Call on GMED/NUVA Merger
Our Call
On 4/13, we hosted Eric Major, co-Founder of K2M and former President of Stryker Spine to discuss the announced GMED/NUVA deal. In this note, we discuss the highlights from the call and include the transcript as well.

1/ Eric Major views the GMED/NUVA union as exciting. Mr. Major characterized the announced GMED/NUVA deal as exciting, with much of the industry in a wait-and- see mode currently. Strategically, our expert believes that the deal brings together a strong, comprehensive portfolio, which includes enabling technology as well as core spine products. This deal will make GMED/NUVA the #2 player in WW spine and the combined portfolio is expected to open up access to more hospitals.

2/ As expected, the integration process will be challenging and complex. Our expert agrees that the integration process will be complicated and challenging, with both timely communication and decision making critical to managing the integration process and
making the deal successful. The different corporate cultures of both companies is well known and it will be undoubtedly complex to bring them together.

3/ Eric Major does not believe that the combined company will be too big to grow. While the portfolio of the combined company will be compelling, our expert believes that focusing on innovation and launching new products will be key to growing above market. While previous spine deals ended up with a broader portfolio, our expert believes that they shifted from a culture of innovation and cautioned GMED/NUVA not to take its eye off new product development.

4/ Retaining sales reps will be important. Our expert indicated that there will likely be some sales force attrition in the near term with both larger and smaller, emerging players poised to benefit from the disruption. Our expert also believes that GMED will likely pause
competitive rep recruiting near term as they focus on integration. However, he believes that the comprehensive portfolio of the combined company will be exciting enough to
attract reps once the dust settles.

5/ Too early to tell what happens to Pulse. Our expert believes that it is too early to tell what happens to NUVA’s platform, but mgmt should continue executing on its strategy around imaging, navigation and robotics. Our expert believes that both SYK and JNJ will have to bring differentiated propositions with the launch of their upcoming spine robots in order to distinguish themselves from GMED and MDT and to be successful in spine robotics.