RTI Surgical Sells OEM Biz to Become Pure-Play Spine Firm

RTI Surgical Holdings Inc. announced a definitive agreement to sell its OEM business to Montagu Private Equity LLP, a leading European private equity firm, for a total consideration of $490 million. The transaction is targeted to close in the first half of 2020.
 
RTI Surgical Holdings has agreed to sell its OEM business to Montagu, a leading European private equity firm, for $480 million in cash and certain other consideration, totaling $490 million. The RTI Surgical Holdings Board of Directors unanimously approved the transaction.
 
The transaction is subject to approval from RTI Surgical Holdings’ shareholders, the customary regulatory approvals and the satisfaction of customary closing conditions, and is targeted to close in the first half of 2020. Upon closure of the transaction, RTI Surgical Holdings will be a global pure play spine business focused on growth and innovation.
 
After closing, the OEM business will continue under a contractual relationship to support RTI in developing and manufacturing certain products in RTI’s product portfolio. Proceeds from the transaction are currently expected to be used to repay indebtedness and to capitalize RTI Surgical Holdings for continued investment in its global spine portfolio.
 
“The sale of the OEM business to Montagu completes the first phase of our strategic transformation to reduce complexity, drive operational excellence and accelerate the growth of RTI Surgical,” said Camille Farhat, President and CEO, RTI Surgical Holdings. “We are excited about this transaction, not only because of the value that is immediately created, but also because the OEM business is going to an experienced investor who understands the business and the expertise of the people and will support its growth and development.”
 
Farhat continued, “Following the transaction, we believe RTI will be a global pure play spine company with tremendous fundamentals and exciting long-term growth prospects. We estimate the spine business will have generated global revenues in the range of $118 million to $119 million with gross margins of approximately 75 percent in 2019. Immediately, post-transaction, the continuing business is expected to be debt-free and have approximately $175 million to $200 million of cash on the balance sheet to support its growth, which will be further driven by our Novel Therapies and an expected minimum of 10 new product introductions during each of the next two years.”
 
Olivier Visa, President of the OEM business commented, “We are thrilled about the sale of the OEM business to Montagu. We have built a world-class design, development, and manufacturing competency with demonstrated expertise across tissue, biologics, and hardware with a tremendous team and a customer base of leading medical technology companies. We are vested in continuing to build customer intimacy in service of our existing and future partners and continuing our legacy of serving more patients and maximizing the gift of donation. We look forward to working with Montagu in driving the growth of the business and deepening the significant expertise and core competencies we have developed to serve more patients.”
 
Guillaume Jabalot, Director, Montagu, said: “As a strong, resilient business that is well-positioned to capitalize on accelerated growth opportunities, RTI’s OEM business is an excellent fit for Montagu’s investment strategy. We look forward to working with Olivier and the team to support the business in this exciting next chapter of growth, maintaining its ethos of exceptional service and innovation.”