Plainsboro, New Jersey and Irvine, California / August 7, 2007/ -- Integra
LifeSciences Holdings Corporation (NASDAQ: IART) (“Integra”) and IsoTis,
Inc. (NASDAQ: ISOT) (“IsoTis”) announced today a definitive agreement
whereby Integra would acquire IsoTis in an all cash transaction. This
strategic combination, unanimously approved by the Board of Directors of
IsoTis, will create a global leader in regenerative medicine. The
transaction is expected to be completed in the fourth calendar quarter of
2007. The transaction offers a number of potential strategic benefits to
Integra:
• Combination creates comprehensive orthobiologics portfolio
• Combined company to have one of the largest sales organizations
focused on orthobiologics in the United States
• Extensive channel coverage in neurosurgery, spine and extremity
reconstruction markets expected to drive cross-selling opportunities and
enhanced revenue growth
Upon closing, IsoTis, Inc. will become a wholly-owned subsidiary of
Integra. Integra will be one of the largest companies in the world focused
on advanced technology in orthobiologics and will have a product portfolio
that encompasses some of the largest and most trusted orthobiologic brands,
such as INTEGRA® Dermal Regeneration Template, DuraGen® Dural Graft Matrix,
Integra Mozaik™ Osteoconductive Scaffold, NeuraGen® Nerve Guide and the
Accell family of demineralized bone matrix products, DynaGraft®II and
OrthoBlast® II. The combined company will have operations in North America
and Europe with more than 2,000 employees, including approximately 300
sales and service professionals and over 500 employees in Europe.
Under the terms of the merger agreement, IsoTis shareholders will receive
$7.25 in cash for each share of IsoTis common stock they own, which
represents total consideration of approximately $51 million, plus debt to
be repaid at closing.
"This combination brings together two well-respected industry leaders in
the regenerative medicine marketplace," said Stuart Essig, Integra’s Chief
Executive Officer. "Both Integra and IsoTis provide some of the most
advanced technology addressing surgeons’ needs. By combining our companies'
complementary, best-in-class products and technologies, we expect to drive
enhanced revenue growth and value creation. Integra has a track record of
successfully executing on and integrating strategic transactions and we
expect to realize the benefits of this combination in both our top line
growth and earnings per share over the long term."
Pieter Wolters, IsoTis’ President and Chief Executive Officer, said, " We
believe this transaction enables both IsoTis and Integra to reach our
shared goal of improving patient outcomes in an innovative, cost-effective
manner. We are very excited about the benefits this combination of industry
leaders will provide to shareholders, employees, business partners,
physicians and patients."
Benefits of the Combination
Comprehensive orthobiologic product portfolio using best-in-class
technology. Both Integra’s and IsoTis’ products are recognized as
best-in-class. The combined company will be uniquely positioned to offer a
comprehensive orthobiologic product portfolio.
Extensive channel coverage. The merged company will have one of the
largest sales and service organizations focused on orthobiologics in the
United States. IsoTis distributes its products through a network of
independent distributor agents in the United States, which Integra intends
to build upon, a network of international stocking distributors, and
private label partners. Integra has direct sales organizations focused on
neurosurgery, extremity reconstruction, spinal surgery and general surgery,
with over 250 direct sales reps in the United States and over 50 sales
professionals in Europe. Integra intends to integrate IsoTis’ domestic and
international sales and marketing organization and its global network of
independent orthopedics distributors into its own sales efforts and
leverage this expanded distribution.
Cross-selling opportunities. By leveraging the combined company's product
offering and broader channel coverage, Integra and IsoTis expect to drive
cross-selling opportunities across the organization, increasing penetration
of key customer segments such as neurosurgery, spine, extremity, trauma and
reconstructive surgery. These initiatives are expected to enhance revenue
growth over the long term.
Expanded international presence. The merged company will benefit from a
broader global platform with direct selling organizations in North America
and Europe. Today, approximately 25 percent of Integra’s and IsoTis’
combined revenues are generated internationally. The companies expect to
increase growth in international revenues by capitalizing on the increased
scope and scale created by this transaction, which will include an
international direct sales and service team of over 75 associates and 200
distribution partners selling in over 100 countries.
Cost savings. Excluding transaction related costs and charges, the
combined organization is expected to generate recurring cost savings from
enhanced efficiency in manufacturing, purchasing, administrative, research
and sales and marketing efforts.
Integra Guidance for 2008
The companies expect to initiate programs that are expected to enhance
revenue growth in the long term. Concurrent with the signing of the merger
agreement, the companies have announced a strategic alliance whereby
Integra will sell on a private label basis IsoTis’ DynaGraft® II and
OrthoBlast® II demineralized bone matrix products through its Integra
NeuroSciences and Integra Extremity Reconstruction direct sales
organizations in the United States.
IsoTis has recently announced its intention to wind down its European
operations. This process has begun and IsoTis expects to achieve pre-tax
savings of approximately $3-$5 million per year from these actions. After
elimination of its European entities and facilities, IsoTis will maintain
research and manufacturing operations at a single site in Irvine,
California.
“While the transaction will be dilutive to reported earnings for several
quarters as we restructure the business, we expect the restructuring
activities surrounding the IsoTis acquisition to generate projected pre-tax
cost savings of approximately $9 to $11 million per year for 2008 and
beyond, as compared to IsoTis’ historical 2006 results.” said Stuart M.
Essig, Integra’s President and Chief Executive Officer. “Substantial
savings will come from the reduction of public company costs, duplicative
board and executive management costs, redundant insurance costs, and
reduced advisory, legal and accounting fees. Additionally, by the end of
2008, Integra expects to complete the integration of IsoTis’, marketing,
product development, administrative and logistics functions into Integra’s
existing infrastructure and generate additional cost savings.”
Integra expects to in