Does Stryker Corporation (NYSE:SYK) Acquisition of MAKO Surgical Corp (NASDAQ:MAKO) Prove Too Optimistic?
MAKO Surgical Corp (NASDAQ:MAKO) is a Florida based company with a market capitalization of $758 million. It has 436 employees and has 46.9 million outstanding shares. It had ended trading yesterday at $16.17 per share. On September 25, Stryker Corporation
(NYSE:SYK) announced that it has reached an agreement with MAKO Surgical Corp (NASDAQ:MAKO) to buy the company in a deal which is worth $1.65 billion.
According to the announcement, the second largest seller of orthopedic devices has agreed to shell out $30 for each share of Fort Lauderdale based Mako. This translates to an 86% premium on the company’s September 24 closing price of $16.17 per share. MAKO Surgical Corp (NASDAQ:MAKO) specializes in design and manufacture of robotic limbs and synthetic implants which are used in knee joints replacement and hip replacement surgeries. Stryker Corporation (NYSE:SYK) CEO Kevin Lobo has been quoted to have indicated that the acquisition would start impacting Stryker Corporation (NYSE:SYK) revenue positively from the third year onwards. In the first full fiscal after the merger, combined earnings would take a slight hit as per the same quoted announcement from Mr Lobo.
MAKO Surgical Corp (NASDAQ:MAKO) shares were up by 83% from yesterday’s closing price after the company announced that it would be acquired. The stock is trading at $29.50 per share which translates to a 61% increase over its 52-week price. The stock is experiencing acute investor interest with the shares being traded well over its 65 day average trading volume. A near record 38 million shares of the company have changed hands till now in today’s trading which is way above its daily average of 645k shares. The transaction is subject to approval from MAKO Surgical Corp (NASDAQ:MAKO) share holder and other customary regulatory approvals. The company had reported $112 million annual sales in a trailing 12 months.