Smith & Nephew, a London-based medical technology business, announced today it has purchased ArthroCare, an Austin medical device company, for $1.7 billion.
The deal, which is one of the biggest for a Texas company this year, shines a spotlight on a growing medical device industry in Austin, which is usually more known for its IT and software companies.
ArthroCare (NASDAQ: [[ticker:ARTC]]) makes devices for use in soft-tissue surgery, including a radio-frequency technology that can dissolve soft tissue with less damage than traditional methods. The devices have been used across specialties including arthroscopy, urology, and neurology. Founded in 1993, the Austin company has about 1,700 employees.
Smith & Nephew (NYSE: [[ticker:SNN]]), which primarily focuses on knee and hip joint replacements, says the purchase helps the company build up its business in wound care.
“This is a compelling opportunity to add ArthroCare’s technology and highly complementary products to further strengthen our sports medicine business,” Olivier Bohuon, CEO of Smith & Nephew, stated in a press release.
The London company said it will pay $48.25 per ArthroCare share in cash and expects the deal to close by summer.
David Fitzgerald, ArthroCare’s president and CEO, called the purchase a “natural transaction for both companies,” especially considering their pre-existing licensing and supply partnerships.
In 2012, Smith & Nephew had spent about $24 million to license and sell ArthroCare’s Coblation RF technology, the London company said.
