Medtronic finalizes its $1.7B purchase of Mazor Robotics

Medtronic completed one of the year's largest acquisitions in orthopedics Wednesday, buying Israel-based Mazor Robotics in a $1.7 billion cash deal that aims to improve spine surgery by providing more predictable and consistent results.

Medtronic and Mazor have been working together for years on a hybrid robotic surgical system called the Mazor X Stealth Edition. It combines Medtronic's spine devices and surgical navigation equipment with Mazor's surgeon-directed robotic arm for spine surgery, creating a system in which physicians can generate detailed 3-D surgical plans and be executed with high precision, according to the companies.

"Medtronic aims to accelerate the advancement and adoption of robotic-assisted surgery in spine," Geoff Martha, president of Medtronic's Restorative Therapies Group, said in a news release. Medtronic's strategy for synergy in spinal surgery "will transform spine care through procedural solutions that integrate implants, biologics, and enabling technologies like navigation, 3-D imaging, robotics and powered surgical tools."

The deal calls for Mazor shareholders to be paid $29.25 in cash for each ordinary share they own. The net cost of the deal for Medtronic is $1.3 billion, after factoring in Medtronic's existing ownership stake in Mazor. (Medtronic has roughly $500 million worth of equity in about 40 companies.)

Although Medtronic doesn't expect the deal to positively impact adjusted earnings per share in fiscal 2019, it is projected to create a positive double-digit return on invested capital by the fourth year of the deal, putting the acquisition in line with Medtronic's long-term financial goals.

Dr. Christopher Good, spine surgeon and president of the Virginia Spine Institute, said the Mazor X Stealth system is designed to help doctors precisely carry out their intended procedure, not take the place of skilled clinicians.

"Everything that happens in the operating room depends on the trained medical professionals who are there, and that will never change. However, the Mazor X Stealth Edition gives us a very powerful tool to plan our desired surgical procedure and helps make sure the surgery takes place exactly as planned," Good said in the announcement. (Good received payments from Medtronic in 2017, and he owned more than $1 million in stock options in Mazor, according to federal records.)

Medtronic announced its plans to acquire Mazor in September, one year after Medtronic agreed to become Mazor's exclusive worldwide distributor for its newest spine surgery systems.

The U.S. Food and Drug Administration cleared the system for U.S. marketing on Nov. 2. It is indicated for "precise positioning of surgical instruments or spine implants" during spine and brain surgery.

Although pricing for the surgery system and the related disposable supplies were not announced, Mazor told investors last year that the machine would have a $900,000 price tag, plus about $1,500 in supplies for each procedure. Newer prices may be lower, but exact figures were not disclosed Wednesday.

Joe Carlson • 612-673-4779