Lewisville, TX-based Orthofix International signed an agreement on April 24 to sell Breg, its sports medicine business, to Chicago-based Water Street Healthcare Partners, a strategic private equity firm focused on the healthcare industry.
Water Street is expected to close on the deal with Orthofix during the second fiscal quarter of 2012. Net proceeds to Orthofix from the sale are anticipated to be approximately $140 million, which will be used for the prepayment of debt as required by Orthofix’s existing credit agreement. Orthofix purchased Breg in 2003 for a reported $150 million.
“With the divestiture of the sports medicine business, we are now able to devote Orthofix’s full resources and attention to strengthening our value proposition around our repair hardware and regenerative biologics and stimulation solutions,” said Robert Vaters, Orthofix president and chief executive officer. “We believe this deleveraging event and resulting borrowing capacity will allow us to expand and enhance both our spine and orthopedic business units in a way that accelerates our ability to create shareholder value.”
In an April 24 conference call, Orthofix representatives also noted that the transaction will also allow the company to improve its margin profile and reduce volatility in its earnings.
Carlsbad, CA-based Breg has about 500 employees in the US and Mexico and offers a range of cold therapy and bracing products as well as orthopedic practice solutions.