Integra LifeSciences to acquire Kinetikos for $40 million

By E. Janene Geiss

Philadelphia, June 30 - Integra LifeSciences Holdings Corp. said Friday that it has agreed to acquire the shares of Kinetikos Medical, Inc. for about $40 million in cash, subject to certain adjustments, including future payments based on the performance of the Kinetikos business after the acquisition.

Kinetikos, based in Carlsbad, Calif., is a developer and manufacturer of orthopedic implants and surgical devices for small bone and joint procedures involving the foot, ankle, hand, wrist and elbow, according to a company news release.

The company generated revenues of $11.4 million for the 12 months ended March 31, officials said.

"This acquisition will allow us to leverage our current and future regenerative products for dermal, tendon and nerve repair targeted for hand surgery," Stuart M. Essig, Integra's president and chief executive officer, said in the release.

Kinetikos' senior management team will join the leadership team at Integra, officials said.

Kinetikos currently markets products that address both the trauma and reconstructive segments of the extremities market. Its reconstructive products are largely focused on treating deformities and arthritis in small joints of the upper and lower extremities, while its trauma products are focused on the treatment of fractures of small bones most commonly found in the extremities.

The company sells its products through about 45 independent sales agencies in the United States and through 17 independent distributors internationally. About 89% of Kinetikos' sales are generated in the United States. Integra said it looks forward to expanding the sale of Kinetikos' products internationally through its well-established Newdeal infrastructure.

This acquisition is expected to be neutral to Integra's adjusted earnings, which exclude costs related to the fair value purchase accounting for acquired inventory, restructuring and integration charges and the impact of estimated share-based compensation expense, for the remainder of 2006, and accretive to Integra's earnings thereafter.

Integra said it expects to close the deal in the third quarter. It said it expects to provide detailed guidance regarding the financial aspects of the transaction, including the impact of purchase accounting, and its expected impact on Integra's future financial results.

First Albany Capital served as adviser to Kinetikos for the transaction.

Integra is a Plainsboro, N.J., maker of medical devices with a focus on neurosurgery, reconstructive surgery and general surgery.

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