Medical device maker Stryker said Monday it would buy Sage Products for $2.78 billion, adding products that prevent hospital-acquired infections to its portfolio of medical devices.
Sage’s products include ones meant to reduce “never events,” such as operations on the wrong leg. It had sales of $430 million in fiscal 2015, up 13% from a year earlier, compared with $9.95 billion for Stryker.
“This acquisition aligns with Stryker’s focus on offering products and services that support a mindset of prevention, specifically in the area of ‘never events’ such as hospital-acquired infections,” Stryker CEO Kevin A. Lobo said in a news release.
“This business will also provide a consistent disposable revenue stream that will complement our capital equipment offerings,” he added.
Stryker is buying Sage from private equity firm Madison Dearborn Partners, which invested $350 million in Sage three years ago and, according to Bloomberg, will make nearly a 320% gain from the sale.
Stryker’s biggest business is orthopedic devices used in replacement surgery. “Facing pressure from hospitals and purchasing groups that are trying to control costs, medical device companies have been consolidating to offer a wider range of products,” Bloomberg noted.
More than 590 deals worth about $82 billion were announced or completed in the sector over the past year, according to Bloomberg.
Sage’s portfolio includes products for oral care, skin preparation and protection, patient cleaning and hygiene, turning and positioning devices, and heel care boots.
“We believe that Sage is well-positioned for continued achievement and long-term success with Stryker, a company that understands our business, supports our goals and embraces our values,” Sage CEO Scott Brown said.
Kalamazoo, Michigan-based Stryker said the deal would likely to add to its 2016 adjusted net earnings, excluding acquisition-related costs. The company, whose shares closed almost unchanged at $99.14 in trading Monday, also raised its 2016 adjusted earnings forecast by 5 cents to $5.55-5.75 per share.