Dublin-headquartered medical technology firm Medtronic reached an agreement with Israeli medical device company Mazor Robotics, a pioneer in surgical robotics and spinal surgery, to acquire shares it doesn’t already own in the company in a deal that values it at $1.64 billion.
The robotic operating room at Hadassah Hospital Ein Kerem, Jerusalem, Israel. Courtesy of Hadassah.
Dublin-headquartered medical technology firm Medtronic reached an agreement with Israeli medical device company Mazor Robotics, a pioneer in surgical robotics and spinal surgery, to acquire shares it doesn’t already own in the company in a deal that values it at $1.64 billion. The companies made the announcement late Thursday.
According to the agreement, Medtronic agreed to buy Mazor’s shares at $58.50 per American Depository share or $29.25 per ordinary share in cash. According to Bloomberg, Medtronic already had an 11 percent stake in the Israeli medical device maker, but will still pay $1.34 billion excluding Medtronic’s existing investment. In an earlier agreement in 2016 between the two companies, Medtronic became the exclusive global distributor of the Mazor X spine surgery assurance system.
The boards of directors of both companies have unanimously approved the transaction, and the deal is expected to close by the end of January 2019.
The agreement, an effort by Medtronic to become a leader in spinal surgery using guided robotics, is the largest amount ever paid for an Israeli company in the medical sector. It’s valued at higher than the $1.1 billion that Japanese pharmaceutical firm Mitsubishi Tanabe Pharma paid for Israel’s clinical-stage pharmaceutical company NeuroDerm in July 2017.
“We believe robotic-assisted procedures are the future of spine surgery, and provide surgeons a more precise, repeatable, and controlled ability to perform complex procedures,” said Geoff Martha, executive vice president and president of the Restorative Therapies Group at Medtronic. “Medtronic is committed to accelerating the adoption of robotic-assisted surgery and transforming spine care through procedural solutions that integrate implants, biologics and enabling technologies.”
Martha added that Medtronic intends to keep the Mazor site and team in Israel “as a base for future growth” and “to further cultivate Mazor’s legacy of innovation in surgical robotics.”
Mazor Robotics CEO Ori Hadomi said in a statement that the deal was part of a “historic day for spine surgery and a defining event in the market’s evolution,” adding that the company’s “full integration into Medtronic will maximize our impact globally through Medtronic’s channels, advance our systems’ leadership position in the marketplace, and drive the realization of our vision to heal through innovation.”
Founded in 2001 based on technology developed by Moshe Shoham, a medical engineer from the Technion – Israel Institute of Technology, Mazor’s core tech includes the Mazor Robotics Guidance System (Mazor X) and the Renaissance Surgical-Guidance System,w which has transformed spinal surgery from a freehand procedure to an accurate, cutting-edge guided procedure using robotics. NoCamels reported that the revolutionary screw placement system developed by Mazor, which for allows spinal implant placement, was used in the world’s first dual robotic surgery performed at Hadassah Hospital Ein Karem in Jerusalem in April 2017.
Last year, NoCamels reported that Mazor Robotics CEO Hadomi was questioned as part of an ongoing investigation by the Israel Securities Authority, which claimed insider trading took place around the time of the May 2016 agreement with Medtronic as Medtronic took control of Mazor’s spinal surgery system in the US. By September, Medtronic had control of international distribution and had
invested an additional $40 million in the company.
In May 2017, the securities authority raided Mazor offices under suspicion that information was leaked to associates before the public announcement, but no formal indictments have been filed.
While the investigation is still underway, it is unrelated to Medtronic’s offer, Martha told Bloomberg in a phone interview. “We are aware of the issue, it’s an ongoing investigation,” he said. “It doesn’t have anything to do with Medtronic or the business.”
Medtronic in Israel
Medtronic has a long history in Israel. It was one of the first multinationals to establish a development center through the Israel Innovation Authority and now employs some 800 people locally in centers in Jerusalem, Yokneam, Herzliya, and Petah Tikva, out of 85,000 employees worldwide.
Medtronic was also one of three multinationals in July to have been approved for a grant by the Israel Innovation Authority to expand its R&D centers for biotechnology and medicine in Israel. The company is expected to receive a NIS 50 million (about $13.8 million) grant over six years to employ developers, engineers, and manufacturers in a development center for laparoscopic surgery visualization systems.
In April this year, Medtronic announced it was buying Israeli company VisionSense, which develops imaging and visualization tech for minimally invasive surgery, for $75 million.