Ossur Acquires Innovation Sports

Ossur, based in Reykjavik, Iceland, has acquired Innovation Sports Inc., Foothill Ranch, California, for USD 38.4 million, Ossur announced January 18. Effective immediately, Ossur will begin executing the planned integration, according to the company.

The acquisition of Innovation Sports follows Ossur's July 2005 acquisition of Royce Medical, Camarillo, California, and the December 2005 acquisition of IMP Holdings in the United Kingdom, causing Ossur North America, Aliso Viejo, California, to more than triple in size in both sales and staff, according to an Ossur spokeswoman.

Commenting on the transaction, Ossur North America President Eythor Bender stated: "Innovation Sports will give us a leading edge in ligament braces, the largest segment of the braces and support market. The move also accelerates Ossur's strategic initiative to powerfully advance in the orthopedics market, and is expected to deliver improved operating efficiencies and other synergies."

Innovation Sports was established in 1983 and has 150 employees. Its main markets are the US, Canada, and central Europe. The US accounts for approximately 50 percent of sales; Europe, 40 percent; and Canada, 10 percent. The company specializes in the innovative design and manufacturing of knee braces for the treatment of ligament injuries and rehabilitative uses, as well as protective braces for athletes. It also has product lines that address pain management and wrist braces, which are new to the Ossur product portfolio. "Our know-how and strong market share in ligament braces, combined with our reputation for superior service, should increase Ossur's opportunities for further growth in this field," said John Turnbull, CEO of Innovation Sports.

For the fiscal year ending 31 December 2005, Innovation Sports is expecting sales of USD 19 million, a gross profit margin of approximately 64 percent, and a normalized EBITDA margin of 19 percent. In connection with the acquisition, Ossur expects to incur approximately USD 3 million of integration and restructuring expenses in 2006 fully expensed in Q1, but projects that these efforts will yield approximately USD 4 million of annual cost savings beginning in 2007.

In connection with the acquisition, additional funding of 40 million USD has been provided by Kaupting bank hf. Repayment will be in 2011 and 2012 and interest is LIBOR +1.75 percent.

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