Symmetry to Buy Codman’s Instrument Business

Symmetry Medical Inc. agreed to buy the surgical instruments business of Codman & Shurtleff Inc., a division of Johnson & Johnson.

Symmetry will acquire the surgical instruments product portfolio and other associated assets for $165 million in cash. The transaction is expected to close by the end of this year.

Codman’s line of surgical instruments will be integrated with Symmetry’s current hospital direct business, called Specialty Surgical Instrumentation (SSI), creating a new business segment with more than $100 million in combined annual sales in the $1 billion worldwide market for general surgical instruments, according to officials from Symmetry. The combined hospital direct general surgical instruments business will be re-named Symmetry Surgical and will be based in Nashville, Tenn.

The deal includes Codman’s reusable stainless steel and titanium surgical hand-held instruments and retractor systems, sterile disposable surgical products (vein strippers, SECTO dissectors, tonsil sponges and surgical marker pens), and sterilization containers. These products typically are used in the surgical specialties of spine, general/OB-GYN, microsurgery/neurosurgery, orthopedics, laparoscopy, cardiovascular, thoracic and general surgery.

This is a solid bottom-line move for Symmetry, executives insisted. It diversifies the company’s revenue base with higher-margin, hospital-direct products that make up approximately 25 percent of total revenue. Pro-forma 2011 revenue for the acquired surgical instrument business is approximately $60 million.

The deal also adds strategic logistics and procurement capabilities in Tuttlingen, Germany, to serve Symmetry’s OEM and hospital customers. As a result of Codman’s broad reach, the purchase also gives Symmetry a global presence in more than 60 countries, creating additional market opportunities.

“The acquisition of Codman’s surgical instruments business is a major milestone that provides significant benefits for all areas of our business,” said Thomas J. Sullivan, president and CEO of Symmetry. “Its brands are very well respected by clinicians and hospital customers throughout the world and fit well with Symmetry’s reputation for quality and customer service.”

Sullivan added that the purchase achieves a number of “strategic objectives,” including including diversification of the company’s revenue base with higher margin, intellectual property-backed products that generate strong cash flow.

“We believe the additional presence in demanding surgical specialty procedures and relationships with key surgeon developers will enhance Symmetry’s ability to bring innovative, value-add new products to the market for the benefit of both our OEM and hospital customers,” he said.

Sullivan will serve as president of Symmetry Surgical in addition to his current responsibilities at Symmetry Medical. Chris Huntington, Symmetry Medical’s chief operating officer, Asia, will be appointed to the position of chief operating officer of Symmetry Surgical. Huntington will lead integration efforts and report directly to Mr. Sullivan. The executive team of Symmetry Surgical will include a combination of senior leaders from the surgical instruments business of Codman and SSI, as well as newly recruited senior industry executives.

Symmetry Medical is based in Warsaw, Ind. Codman is headquartered in Raynham, Mass.