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May 17, 2011

Stryker Acquires Orthovita to Expand Orthobiotic Business

Stryker Corporation announced today a definitive agreement to acquire Orthovita, Inc. a global developer and manufacturer of orthobiologic and biosurgery products, through an all cash multi-million-dollar tender offer in a two-step process. Orthovita’s product line of medical implants for the replacement of bone will complement Stryker's existing orthobiologics offering, which is currently sold through multiple Stryker divisions.

Orthovita competes in the $5 billion orthobiologics market and is a provider of synthetic bone grafts with its Vitoss product offering, and also competes in vertebral augmentation with Cortoss. In addition, the company's biosurgery business manufactures hemostasis products such as Vitagel, which are designed to control intra-operative and post-operative bleeding.

Orthovita’s sales were $95 million in 2010. 

Under the terms of the agreement, Orthovita shareholders will receive $3.85 for each outstanding Orthovita share of common stock. The value of the transaction is estimated at $316 million, based upon Orthovita's 79 million fully diluted shares outstanding as well as net debt of $12 million.

The boards of directors at Stryker and Orthovita have approved the transaction, and the board of directors of Orthovita resolved to recommend that Orthovita shareholders tender their shares to Stryker in the tender offer.  In addition, shareholders holding approximately 14.5 percent of the outstanding shares of Orthovita common stock have entered into agreements with Stryker to support the transaction and to tender their shares in the offer.

The tender offer is scheduled to start within 10 business days and is expected to close in the second quarter of 2011.  The tender offer is subject to customary closing conditions, including the tender of a majority of the outstanding shares of Orthovita common stock on a fully diluted basis and the expiration or termination of the Hart-Scott-Rodino Antitrust Improvements Act waiting period.

Following the tender offer, Stryker will acquire the remaining outstanding shares of Orthovita common stock through a second-step merger.  Upon closing, the transaction is expected to be neutral to Stryker's 2011 earnings per share excluding acquisition and integration-related charges.

Citi served as Stryker's exclusive financial advisor in connection with this transaction.

Stryker offers a diverse array of medical technologies, including reconstructive, medical and surgical, and neurotechnology and spine products.

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Deborah DiSesa Hirsch is an award-winning health and technology writer who has worked for newspapers, magazines and IBM in her 20-year career. To read more of her articles, please visit her columnist page.

Edited by Jennifer Russell
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