Integra LifeSciences this morning announced plans to acquire the Theken family of businesses - Theken Spine, Theken Disc and Therics - for $75.0 million (2.2x 2007 revenues) plus up to $125.0 million in future performance-based payments (up to 5.9x 2007 revenues.) This acquisition represents a significant effort by Integra to strengthen its spine business; it currently offers a wide range of biologics, including the Mozaik products, but no metal devices.
Integra was clearly willing to pay for this shift in strategy. Though Theken's product line is largely undifferentiated, with earnouts factored in the Integra deal represents a 5.9x multiple. For purposes of comparison, Synthes' recent acquisition of N Spine, which included a differentiated dynamic stabilization device, represented what we estimate to be about a 7.5x multiple. In 2006, Kyphon bought St. Francis, maker of the X-Stop, at a 14.5x multiple. That the Theken portfolio was able to command such a high multiple speaks to the health of the spine space and the high demand for companies with scale in this market.
