Stryker to buy medical supplier Sage Products

Stryker Corp has agreed to acquire Sage Products from private equity firm Madison Dearborn Partners for $2.78bn.

The company, which makes medical devices, said the deal includes an anticipated future tax benefit which is expected to exceed $500m and positively impact cash flows over approximately 15 years.

Sage, which develops, manufactures and distributes disposable products used in intensive care units, had sales of $430m in 2015, up 13% over the previous year.

Kevin A. Lobo, chairman and chief executive officer of Stryker, said: "This acquisition aligns with Stryker's focus on offering products and services that support a mindset of prevention, specifically in the area of "Never Events" such as hospital acquired infections.

“Today, through our Medical division, Stryker offers products that are complementary to those produced by Sage. Sage has a 45-year history of focus on patients and caregivers that is evident in their culture and fits well with our Medical division. This business will also provide a consistent disposable revenue stream that will complement our capital equipment offerings. We look forward to welcoming the Sage team to Stryker."

The deal, likely to close in the second quarter of the year, is expected to be accretive to Stryker's 2016 adjusted net earnings per diluted share excluding acquisition, integration-related and intangible amortisation charges and will continue to be accretive thereafter.

As a result, the company lifted its full year 2016 adjusted EPS guidance by $0.05 to between $5.55 and $5.75.

Stryker shares were up 0.4% to $99.49 in pre-market trading.