Medical device giant Stryker (SYK, Financial) has reached an agreement to acquire Inari Medical (NARI, Financial) for $80 per share in an all-cash deal valued at $4.9 billion. This announcement sent NARI's shares soaring, while SYK experienced a slight decline following the merger news. Speculation about the acquisition intensified after reports indicated that SYK was close to finalizing the deal, pushing NARI's stock higher. Excluding recent gains, the purchase price reflects a significant 61% premium over last Friday’s unaffected price.
Although Stryker is not issuing new equity or debt for this acquisition, the high valuation for Inari Medical has raised some concerns among shareholders. Notably, Inari has reported four consecutive quarterly losses. Based on Inari's fiscal year 2024 revenue guidance of $601.5-$604.5 million, Stryker is paying approximately 8.1 times the expected FY24 sales. For comparison, Inari's competitor, Penumbra (PEN, Financial), had a trailing price-to-sales ratio of about 7 times before the merger news.
Despite the high price, Inari appears to be a strategic fit for Stryker.
Overall, Inari Medical is a strategic acquisition for Stryker. While more details on the financial impact of the deal would have been appreciated, Stryker plans to provide insights into the expected effects on 2025 financial results during the Q4 earnings call on January 28.
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