Friday, February 20, 2009

Orthofix’ Blackstone Medical sale meets shareholder opposition

By Marc Songini

Boston-based medical device maker Orthofix International N.V. is seeing a major shareholder oppose the proposed sale of its Blackstone Medical business.

Orthofix (NASDAQ: OFIX) offers a line of minimally invasive surgical and non-surgical products for the orthopedic and sports medicine markets. To round out its product line, back in 2006, it purchased Springfield-based Blackstone Medical Inc., a maker of spinal implant and instrument products, for $333 million.

Ramius LLC, a New York-based investment management firm that owns a stake in Orthofix, now proposes to sell the subsidiary. However, Orthofix announced this week that Ramius had received a letter from one of its largest shareholders, Robert Gaines-Cooper, of Venner Capital SA, opposing the sale of Blackstone.

The letter, dated Feb. 18, was signed by Gaines-Cooper, group chairman of Venner Capital, and addressed to Jeffrey Smith, a partner at Ramius Capital. Gaines-Cooper stated in the letter that he is a major Orthofix shareholder and served as chairman of the board from 1987 until 2006. He claimed that “as both a financier and a medical device expert, I must strongly disagree with Ramius’ assertions about the Blackstone Medical business.”

He stated that a spine strategy was critical to Orthofix’s success, and Blackstone is now “poised for a solid 2009 and beyond.”  He said the board and management are “already showing exciting progress in executing on the strategic plan they have put in place.”  He added: “I remain convinced that a spine strategy in which Blackstone plays a central role will be a crucial driver of success for Orthofix. This letter will, therefore, serve as notice that you do not have my support.”

Last October, Orthofix announced it had won 510(k) approval from the U.S. Food and Drug Administration for its Firebird spinal fixation system.