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Here's Why Mazor Robotics Is Soaring Today

By Brian Feroldi - Updated Sep 21, 2018 at 10:58AM

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Shares jump after the company accepts a buyout offer. Here's what investors need to know.

What happened

Shares of Mazor Robotics (MZOR), a robotic surgery company focused on procedures of the spine and brain, jumped 10% as of 10:41 a.m. EDT on Friday. The double-digit move is a response to the news that Medtronic (MDT 0.63%) is acquiring the company.

So what

Here are the details of the proposed transaction:

  • Medtronic is acquiring Mazor for $58.50 per share, or about $1.64 billion.
  • Since Medtronic already owns a substantial amount of Mazor's stock, the net purchase price will be $1.34 billion. 
  • The deal will be made in cash.
  • The boards of both companies have already unanimously approved the transaction.
  • The deal is expected to close in Medtronic's fiscal third quarter, which ends on January 25, 2019.
  • The deal is expected to be "modestly dilutive" to Medtronic's adjusted earnings in fiscal 2019.
Mural of a big fish swallowing a small fish.

Image source: Getty Images.

Geoff Martha, an executive at Medtronic, praised the deal:

The acquisition of Mazor adds robotic-assisted guidance systems to our expanding portfolio of enabling technologies, and we intend to further cultivate Mazor's legacy of innovation in surgical robotics with the site and team in Israel as a base for future growth.

Mazor's CEO Ori Hadomi was also enthusiastic about the combined companies' potential:

The Mazor team and product portfolio's full integration into Medtronic will maximize our impact globally through Medtronic's channels, advance our systems' leadership position in the marketplace, and drive the realization of our vision to heal through innovation.

Now what

Medtronic controls a substantial amount of Mazor's stock and certainly has the financial firepower to complete this deal. Since both companies boards have already given this transaction the unanimous thumbs-up, it looks like a done deal.

Personally, this shareholder thinks that the acquisition makes a lot of sense, but I'm disappointed that I will no longer be able to participate in Mazor's upside over the long term. Given that this looks like a fait accompli, my plan is to sell my shares as soon as the Fool's trading guidelines allow and roll the proceeds into another highly promising healthcare business.

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Stocks Mentioned

Medtronic plc Stock Quote
Medtronic plc
MDT
$103.32 (0.63%) $0.65
Mazor Robotics Ltd. Stock Quote
Mazor Robotics Ltd.
MZOR

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