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Stryker Spies an Opportunity in Fluorescence Imaging

The company agreed to pay $701 million for Novadaq, maker of the Spy imaging systems, which allow surgeons to visualize blood flow and tissue perfusion in real time during open procedures.

Amanda Pedersen



Stryker Corp. has spied a deal opportunity in the fluorescence imaging space, agreeing to scoop up Mississauga, Canada-based Novadaq Technologies Inc. for $701 million, with a net purchase price of $654 million, reflecting net cash of roughly $47 million.

At $11.75 a share, Stryker is paying a hefty 96% premium over Novadaq's closing price on Friday.

Novadaq is known for its fluorescence imaging technology that provides surgeons with visualization of blood flow in vessels, and related tissue perfusion in cardiac, cardiovascular, gastrointestinal, plastic, microsurgical, and reconstructive procedures. The company was founded in 2000.

Mike Matson, an analyst with Needham & Co., noted that Novadaq's shares (NVDQ) were near a five-year low and the EV/sales multiple Stryker is paying is just above the target's peers. Matson said the deal makes sense for Stryker because it broadens the company's fluorescent imaging offering into open and plastic surgery, and he expects Novadaq's sustained double-digit growth to be accretive to Stryker's overall growth in the coming years.

Stryker's shareholders seemed less convinced of the strategic value of the deal, however. The company's stock (SYK) slipped 97 cents (0.68%) to close at $141.27 Monday after the Novadaq deal was announced.

Earlier this year, Canaccord Genuity analyst Jason Mills predicted that Novadaq, along with five other companies, could be seen as an attractive acquisition target this year.

Amanda Pedersen is Qmed's news editor. Contact her at [email protected].

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