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Medtronic Expands Spinal Surgery Portfolio With Mazor Robotics Deal

Medtronic Expands Spinal Surgery Portfolio With Mazor Robotics Deal

The Dublin-based med-tech company is currently the largest player in the equipment market for spinal conditions.

Medtronic entered into an agreement to promote Mazor Robotics Ltd.’s spinal surgery guidance systems in a deal inked Wednesday. It could result in Medtronic taking as much as 15 percent equity stake in the Caesarea, Israel-based company for up to $52 million.
 
The Irish medical device giant will acquire 15 Mazor systems this year as part of the terms and both companies will align development and commercialization efforts for robotic-based spine systems and applications. If sales targets and other milestones are hit, it would grant Medtronic exclusive global sales and distribution rights for Mazor’s future spine products starting in 2018.
 
“New developments, such as synergistic implants, could generate new revenue streams for Mazor, beyond the anticipated growth of our current revenue streams from capital equipment, service agreements and disposables,” said Mazor CEO Ori Hadomi.
 
Phase two of the deal calls for a three-step equity investment in Mazor. Medtronic will first purchase newly issued securities representing four percent of issued and outstanding share capital. The price for the four percent stake will be equal to the trailing 20-day average price per share, equating to roughly $12 million.
 
Assuming the aforementioned milestones are hit, Medtronic will then buy another 6 percent stake in the company.
 
In the third tranche, Mazor will be given the option to allow Medtronic to purchase a final 5 percent stake, again at the 20-day average price per share. Mazor said Medtronic has the discretion to cap each of the second and third tranches at $20 million apiece.
 
Medtronic currently stands as the world’s largest manufacturer of equipment to treat spinal conditions.
 
Early morning trading saw Mazor’s stock soar to $13.75, up nearly 30 percent from the company’s Tuesday close. Medtronic hovered around its Tuesday close of $80.81.