December 4, 2017 / 1:34 PM / in 10 months

Exactech gets higher $737 million cash offer from TPG Capital

(The Dec. 4 story corrects paragraph 5 to show that Exactech will not be pursuing a wholesale transition of its distributor model)

By Carl O’Donnell

(Reuters) - Medical device maker Exactech Inc EXAC.O said on Monday TPG Capital raised its offer to buy the company to $737 million cash and its board agreed to the amended terms, saying the offer was in the best interests of shareholders.

The revised offer of $49.25 per share represents an increase of 17.3 percent to the previously announced $42 per share on Oct. 23, the company said.

The increase came in response to a last-minute, unsolicited bid from another private equity firm, according to securities filings. The company’s stock closed up 19 percent at $50.42 following the announcement.

Exactech expects the deal to close during the first quarter of 2018. The company develops and produces orthopedic implants and surgical instrumentation for extremities and large joints.

By going private, Exactech would escape the quarter-to-quarter scrutiny of the public markets.

TPG also invests substantially in research and development as well as acquisitions for its healthcare portfolio companies, which often produce long-term profit growth but can weigh on stock prices.

TPG will play an advisory role through Jeff Binder and Dan Hann. Binder was previously chief executive of medical devices company Biomet, which merged with peer Zimmer in 2015. Hann served as interim president and CEO of Biomet.

The deal will add to TPG’s existing portfolio of healthcare companies, which include medical device company Beaver-Visitec and medical software company Mediware Information Systems Inc, among others.

Past TPG portfolio companies include Biomet, Par Pharmaceuticals, and IMS Quintiles, all of which have been acquired or merged with other publicly traded healthcare companies.

Exactech’s founders and management team helped finance the transaction by converting their 10 percent equity stake in the company into subordinated shares that will pay out if the company hits certain valuation benchmarks.

J.P. Morgan Securities LLC is acting as financial adviser to Exactech. Greenberg Traurig PA (Miami) and Greenberg Traurig LLP (NYC) are acting as Exactech’s legal adviser. Ropes & Gray LLP is acting as legal adviser to TPG Capital.

Reporting by Carl O'Donnell in New York; Additional reporting by Akankshita Mukhopadhyay in Bengaluru; Editing by Shounak Dasgupta and Lisa Shumaker

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