Alphatec Holdings (ATEC) is set to acquire EOS imaging for up to a total of $122 million.

The manufacturer of solutions for spinal surgery has agreed to complete the transaction for up to $88 million through a combination of cash and equity, plus pay a debt retirement of $33.9 million. It expects the addition of EOS’ technology to advance its own AlphaInformatiX platform, as well as drive development of predictive analytics and AI-empowered surgical planning.

“We created a conduit to deliver information into the operating room with AlphaInformatiX,” said Pat Miles, chairman and chief executive officer of ATEC, in a statement. “This transaction will integrate spine imaging and anatomical modeling onto the platform to actually inform the operative experience. By pairing ATEC’s approach-based solutions with imaging founded on Nobel Prize-winning technology, we expect to significantly increase demand for ATEC hardware and EOS systems and create a formidable competitive advantage.”

The addition of EOS’ expertise is expected to equip the AlphaInformatiX platform with capabilities for surgical planning, patient-specific implants and intraoperative alignment reconciliation, among other intraoperative functionalities. The use of EOS’ technology in capturing a calibrated, full-body image in a standing (weight-bearing) position enables anatomical angles and dimensions to be precisely measured throughout the surgical process and creates a more accurate understanding of patient alignment during diagnosis. Such qualities can be used to integrate a fully informed plan into surgery and enable post-operative assessments that can be compared to original surgical plans for guidance and updating of procedures.

The acquisition is expected to immediately expand ATEC’s revenue base by adding EOS’ revenue run rate, and provide it with international infrastructure necessary for ATEC’s future global re-expansion. It also will create pull-through and cross-selling opportunities through an expanded sales network and combined customer base that includes EOS’ more than 350 installed imaging systems. In addition, ATEC expects the deal to be accretive to revenue, revenue growth, adjusted EBITDA and free cash flow in the first full year of operations following the completion of the transaction.

“We are very enthusiastic about the opportunity to join the complementary strengths and know-how of EOS imaging and ATEC,” said Mike Lobinsky, chief executive officer of EOS imaging, in a statement. “I have no doubt that our organizations will be able to quickly create a highly differentiated end-to-end offering that will accelerate growth in the U.S. in the short term, while we continue to expand internationally, paving the way for the future global growth of the combined entity.”

A tender offer agreement has been approved by the Boards of Directors for both ATEC and EOS, in which ATEC will launch a tender offer for all of the issued and outstanding shares and convertible notes of EOS Imaging for up to $122 million. The offer will consist of a cash tender offer for a price of $3.09 (€2.80) per EOS share (the "Cash Offer"), or at the option of each EOS shareholder, an exchange tender offer whereby each EOS shareholder will receive 0.50 ATEC common shares per EOS share (the "Exchange Offer").

The transaction is expected to close in the third quarter of 2020, subject to customary closing conditions, including obtaining regulatory clearance from the AMF, French foreign investment clearances and a favorable opinion of the EOS board of directors based on the fairness opinion issued by the independent expert appointed by EOS.

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