K2M Group Holdings Inc (NASDAQ: KTWO) is having an overwhelmingly strong start to the trading session this morning, and for good reason. The company announced that it has entered into a definitive to be acquired at a strong premium. Today, we’ll talk about:
- The acquisition;
- what we’re seeing from KTWO as a result; and
- what we’ll be watching for ahead.
KTWO Announces Acquisition News
As mentioned above, K2M Group is having an incredibly strong start to the trading session in the pre-market hours after announcing that it will be acquired. In a press release issued early this morning, the company said that it has entered into a definitive merger agreement with Stryker Corporation (NYSE: SYK). Under the terms of the agreement, SYK will acquire all of the issued and outstanding shares of common stock of KTWO in an all cash transaction valued at $1.4 billion. That works out to $27.50 per share, representing a premium of 27%.
In the release, the company said that upon the completion of the transaction, KTWO will become a wholly owned subsidiary of SYK. In a statement, Eric D. Major, President, CEO and Chairman at KTWO, had the following to offer:
Joining Stryker will be a very exciting next chapter for our global team and surgeon customers around the world… Stryker’s established leadership in the orthopedic and neurosurgical market, combined with K2M’s culture of innovation and leadership in complex spine and minimally invasive solutions, represent a powerful opportunity for Stryker to strengthen its leadership in the $10 billion global spine market.
The above statement was followed up by Kevin A. Lobo, Chairman and CEO at SYK. Here’s what he had to offer:
This acquisition underscores our commitment to the spinal market, which is the largest segment of Orthopaedics with significant unmet needs… We believe K2M will significantly enhance our presence with surgeons, patients and employees in both the spine and related neurotechnology markets.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start working in the market is that the news leads to moves. In the case of K2M, the news proved to be overwhelmingly positive. After all, the company is not only going to be acquired, but the acquisition will happen at a strong premium. So, it comes as no surprise that excited investors are sending the stock screaming for the top. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (8:47), KTWO is trading at $27.27 per share after a gain of $5.45 per share or 24.98% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on KTWO. In particular, we’re interested in following the news surrounding the acquisition as it is still subject to customary closing conditions as well as regulatory approval. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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