Stryker Agrees to Buy Mako, Adds Robotics to Portfolio

Stryker Corporation has agreed to acquire Mako Surgical Corporation for $1.65 billion, adding robotic surgical technology to its offerings. Stryker, based in Kalamazoo, Mich., provides medtech including reconstructive implants, medical and surgical equipment, and neurotechnology and spine products. Mako will add its Rio robotic-arm interactive orthopedic system and proprietary Restoris implants for orthopedic procedures called Makoplasty to the mix.

Mako investors will receive $30 per share from Stryker in the deal. This represents a premium of 86 percent over Mako’s closing price on Sept. 24.

“The take-out price seems high, but strategically it makes a lot of sense,” said Joanne Wuensch, an analyst at BMO Capital Markets in New York, in a note to investors today. “For Stryker, the company takes a step forward into robotic surgery, consolidates its orthopedic silo, and continues its [mergers and acquisitions] strategy that it has been on for several years.”

“Mako has established a compelling technology platform in robotic assisted surgery which we believe has considerable long term potential in joint reconstruction,” said Kevin A. Lobo, president and CEO. “The acquisition of Mako combined with Stryker’s strong history in joint reconstruction, capital equipment (operating room integration and surgical navigation) and surgical instruments will help further advance the growth of robotic assisted surgery. Our combined expertise offers the potential to simplify joint reconstruction procedures, reduce variability and enhance the surgeon and patient experience. We look forward to welcoming the Mako team to Stryker.”

Mako President and CEO Maurice R. Ferré said the company’s board of directors approved the sale unanimously with the view that Stryker’s established position in the medtech industry would help widen Mako’s reach significantly.

Stryker investors, however, did not appear to like the news. Stryker shares were down 2.6 percent in premarket trading the morning of Sept. 25, the day after the announcement. Meanwhile, Mako shares gained 82 percent to sit just below the valuation of $30 per share.

Richard Newitter, an analyst with research firm Leerink Swann, said the “bold” acquisition may be disruptive to market share in the hip and knee industry. The company’s surveys suggest that while hip/knee surgeons view robotics as one of the most innovative solutions in orthopedic reconstruction currently, they are also reluctant to use a new technology that requires switching from implants and tools well-known to them. Mako’s inclusion under the well-known and trusted Stryker umbrella, Newitter said, could mean significant shifts in the hip and knee markets as surgeons move over to what are know Stryker’s robotic technologies.