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Merger Arbitrage Mondays – Stryker Pays A Pretty Penny For Vocera

  • January 10, 2022

Merger activity increased last week with two new deals announced and six active deals completed. SPAC business combinations continued to be muted.

The year 2022 kicked off with two healthcare tech deals, continuing the trend of the 35 health care sector deals announced in 2021, with a total value of over $157 billion.

Incorporated in 2000 and headquartered in San Jose, California, Vocera Communications (VCRA) specializes in workflow platforms for healthcare providers. The  company provides software that offers digital care coordination and communication, which includes the hands-free Vocera Smartbadge. Vocera’s workflow solutions enables mobile workers to choose devices based on their role or task, that includes smartphones or one of the company’s wearable communication devices, and use voice commands to reach people by name, role or group.

Vocera entered into a definitive agreement to be acquired by Stryker Corporation (SYK) for an enterprise value of $3.09 billion. This is an unusual move for a medical devices company like Stryker but it looks like everyone wants to have a slice of the connected/digital healthcare pie. While the deal seems large, it is a small fraction compared to Stryker’s enterprise value of $110 billion. Considering Stryker already has more than $10 billion in debt on its balance sheet, it is surprising the company did not use its expensive stock (EV/EBITDA of 24) to purchase Vocera and instead opted to pay all cash for the deal. Stryker is paying 12 times sales and a whopping 69 times forward EBITDA for this deal.

You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.

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