(Reuters) - Medical device maker Stryker Corp (SYK.N) said it would buy medical supplies maker Sage Products LLC for $2.78 billion, snapping up a major player in the market for products aimed at helping hospitals control the spread of infections.
The purchase, from private equity firm Madison Dearborn Partners, is among Stryker’s biggest-ever as the company leverages off its strong balance sheet.
And more deals are likely, Chief Executive Kevin Lobo said on an analysts’ call after the deal was announced on Monday.
“One of the reasons to postpone the share repurchase program was to make sure we still have capacity, so this will not be the last deal that we do,” Lobo said.
Sage, based in Cary, Illinois, specializes in developing and distributing disposable products targeted at reducing patient safety incidents such as hospital-acquired diseases and infections acquired during surgery.
The spread of superbugs, or antibiotic-resistant bacteria, has led to a call for better patient safety measures in hospitals, where these infections commonly spread.
Hospitals are also under pressure to implement programs to improve the safety of their employees.
Sage’s offerings include oral care products that fight hospital-acquired pneumonia, pre-operation kits that prevent surgical site infections and patient hygiene solutions.
Kalamazoo, Michigan-based Stryker said the deal would likely to add to its 2016 adjusted net earnings, excluding acquisition-related costs.
The company, whose shares were down 1.6 percent at $97.57 in early trading, also raised its 2016 adjusted earnings forecast by 5 cents to $5.55-5.75 per share.
J.P. Morgan Securities LLC was financial adviser to Stryker, while Sullivan & Cromwell LLP was legal counsel. Barclays advised Sage.
Reporting by Amrutha Penumudi in Bengaluru; Editing by Saumyadeb Chakrabarty and Ted Kerr