Ossur buys Royce Medical
BY JOHN MCCORMICK, JULY 28, 2005
This morning Icelandic prosthetics developer Ossur announced its second major foray into the bracing business: the acquisition of Royce Medical Holding Inc. And for a pretty penny too... $216 million or well in excess of 4x revenue by our estimates. The transaction is expected to close in a month. Royce's last owner was a private equity firm called Cortec (not the be confused with Allograft developer Cortek) who bought Royce in the summer of 2003 while the Company was in the throes of offshoring its manufacturing to China.
By all counts this deal looks good for both Cortec and Ossur. Good for Cortec because this middle-market manufacturing investor presumably got their required return - in fact a very good return according to our estimates. Ossur stands to gain by now becoming a more viable threat to dj Orthopedics, BREG (an Orthofix company) and Townsend. Why? Two years ago Ossur bought Generation II which, at the time, was the market leader in osteoarthritis braces. Now Ossur has a comprehensive line of functional braces, casting and splinting. And now with a more - much more - meaningful market presence.
Consolidation just keeps on ticking in bracing. Independent bracing companies watch your back...
