Michigan's Stryker Corp. recently finalized its purchase of Hong Kong-based Trauson Holdings Company Limited, hoping the multimillion dollar acquisition will help it expand its presence in China's burgeoning orthopedic market. Stryker paid around $764 million in cash for control of Trauson, which is currently the largest producer of pelvic reconstruction plates and other trauma surgery products in China.
According to Stryker's chief executive, the purchase will improve the Michigan company's position in China and make it easier to "expand into the fast growing value segment of the emerging markets." He added that the firm is excited to build on Trauson's past success. Prior to the merger, Trauson and Stryker entered into a manufacturing agreement in 2007, though the Chinese company remained a major competitor in the production and spine orthopedics. Trauson, which was founded in 1986, listed roughly $60 million in sales in 2011. Analysts with Bloomberg estimate the company's gross profit margins to significantly surpass 60 percent.
Stryker agreed to purchase 61.7 percent of Trauson's shares from Luna Group, the company's current controlling shareholder. According to the terms of the business transaction, Styker will pay $7.50 for each share. The company does not expect the sale to affect its 2013 earnings per share, projecting that that figure will remain neutral excluding costs connected to integration and acquisition.
Experts say the deal potentially represents a substantial profit-making opportunity for Stryker, with orthopedic implant sales expected to reach $2.7 billion in China by 2015. This would make the country the second largest market for such products after the United States, passing Japan.
This case illustrates how profitable strategic mergers and acquisitions can be for Michigan businesses. However, such deals are typically associated with numerous and complex legal issues, making it crucial for companies considering a merger to seek representation from an attorney with significant experience in business litigation and commercial law.
Source: MLive.com, "Stryker Corp. finalizes purchase of Trauson Holdings, trauma surgery manufacturer in China," Ursula Zerilli, March 1, 2013
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