Indiana firm offers to buy Kirschner

June 28, 1994|By Ted Shelsby | Ted Shelsby,Sun Staff Writer

An Indiana orthopedics company made an unsolicited, $10-per-share takeover offer yesterday for Kirschner Medical Corp., sending the Timonium-based medical company's stock soaring.

Shares of Kirschner rose nearly 40 percent yesterday in heavy trading, to close at $9 a share, up $2.50.

The offer by Biomet Inc. of Warsaw, Ind., comes one month after Kirschner, a manufacturer of replacement joints and other orthopedic products, announced that it planned to merge with Orthomet Inc. of Minneapolis.

Under the new proposal, Biomet would pay $10 for each of Kirschner's 3.5 million outstanding shares. The transaction may include the exchange of one share of Biomet common stock for each share of Kirschner stock, or an undetermined combination of Biomet shares and cash. In addition, Biomet would assume Kirschner's debt, pushing the value of the transaction to about $53 million.

C. Scott Harrison, Kirschner's chief executive, described Biomet's offer as "friendly" and said that "it is very attractive when you first look at it." He said the company has contracted Dain Bosworth Inc. of Minneapolis to serve as its financial adviser in determining the board's reaction.

Dr. Harrison said the Kirschner board met yesterday morning and will meet a couple of more times to consider the proposal. "We may be able to come to a conclusion by the middle of the week," he said.

As for the proposed merger with Orthomet, Dr. Harrison said the board has a fiduciary responsibility to consider the "higher offer" from Biomet. He said the company will continue to negotiate with Orthomet and would consider a counteroffer. He said no counteroffer was made yesterday.

James Hawley, executive vice president of Orthomet, told Bloomberg News Service yesterday that the company will convene its board of directors to study the situation. Asked if Orthomet might make a new bid, Mr. Hawley said "anything's possible."

Dr. Harrison described Biomet as "a very successful orthopedic company" that is "highly respected" in the industry.

Biomet designs, manufactures and markets surgical implants for knee and hip replacement and other orthopedic devices for use by medical specialists. It posted sales of $335.4 million last year and had a profit of 64 million.

Kirschner, much smaller, had sales of $67.2 million last year and net income of $2.3 million.

Kirschner has about 550 workers, including 80 in the Timonium area. Dr. Harrison said that it is too soon to determine how a merger might affect them.

It also operates facilities in Fairlawn, N.J.; Delray Beach, Fla.; Marlow, Okla.; and Valencia, Spain.

Orthomet also makes orthopedic implant products and related surgical instruments. A merger with Kirschner would have created a company with annual revenues of about $100 million.

Under terms of a letter of intent signed between Kirschner and Orthomet, a new entity would have been formed that would have been 56 percent owned by shareholders of Orthomet and 44 percent owned by those of Kirschner.

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