Tuesday, March 5, 2013

Spinal surgery firm TranS1 to acquire Baxano for $23.6M

RALEIGH, N.C. —Spinal surgery medical device maker TranS1 (NASDAQ: TSON) is expanding its focus on minimally-invasive lumbar spine treatments with the acquisition of another spinal products company, Baxano, in a stock deal valued at about $23.6 million.
Raleigh-based TranS1 will issue approximately 10.4 million shares of TranS1 common stock and pay $550,000 in cash to acquire San Jose, Calif.-based Baxano. TranS1 will also refinance $3 million of existing Baxano debt at the closing of the deal.
TranS1 also announced a securities purchase agreement in which the company will raise $17.2 million through the sale of 7.5 million shares of common stock at the price of $2.28 per share. The stock sale is contingent on the closing of the Baxano acquisition. When complete, the deal will leave current TransS1 shareholders owning about 72.4 percent of the combined company. Baxano shareholders will own 27.6 percent. The merger is expected to close early in the second quarter and is subject to approval from TranS1 shareholders.
TranS1 focuses on products treating degenerative conditions of the spine affecting the lumbar region. Baxano makes medical instruments that restore spine function. The company said the Baxano acquisition expands its focus on minimally invasive lumbar spine treatments, which represents a $3.9 billion market opportunity. TranS1 characterized Baxano as having a complementary product portfolio that offers cross-selling opportunities in the minimally invasive surgery space.
"We believe that Baxano is a complementary strategic fit for our product portfolio," of TranS1 President and CEO Ken Reali said in a statement. "Minimally invasive treatments are the fastest growing segment of the spine market.”
TranS1 is slightly larger than Baxano in terms of revenue. The Raleigh medical device company reported a $29.8 million loss in 2012 on revenue of $14.5 million. Baxano had revenues of $3.9 million and $9.4 million for the 2011 and 2012, respectively.
At the closing of the acquisition and financing transactions, the company expects to have approximately $30 million in cash on its balance sheet,
"With this additional capital, we are now in a position to demonstrate meaningful revenue growth on a pro forma basis," TranS1 Executive Vice President and CFO Joe Slattery said in a statement.

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