Davis Polk and Latham Take Lead on $1.7 Billion Medical Devices Sale

British medical technology company Smith & Nephew said Monday it has agreed to pay $1.7 billion in cash to acquire ArthroCare, which makes devices used for soft tissue repairs and joint procedures.

Under the terms of the transaction, Smith & Nephew has agreed to pay $48.25 per share for Austin-based ArthroCare, a 6 percent premium over the AnthroCare’s Friday closing price. The deal is expected to close in middle of the year, pending the approval of regulators and ArthroCare’s shareholders. ArthroCare’s largest shareholder—One Equity Partners, which holds a 17 percent stake in the company—has already expressed its support for the sale.

ArthroCare makes surgical devices used in minimally invasive operations, including soft tissue repairs and procedures on large joints such as rotator cuffs. Smith & Nephew plans to fold the company’s complementary products into its own sports medicine portfolio while expanding its U.S. operations by adding ArthroCare’s ear, nose and throat business.

Smith & Nephew CEO Olivier Bohuon said last year that the company had $1.5 billion in cash on hand to use for acquisitions and cited sports medicine as an area where it hoped to grow. In announcing the deal, the London-based firm said it expects the ArthroCare purchase to yield $85 million a year in savings within three years of closing.

The sale comes less than a month after Arthrocare reached a settlement agreement with the U.S. Department of Justice over allegations that it had committed securities fraud by falsely inflating its sales figures. As part of the settlement, ArthroCare agreed to pay a $30 million fine and to participate in a two-year Justice Department compliance program.

Davis Polk & Wardwell is advising Smith & Nephew, a longtime client, on the acquisition with an all-New York team comprised of corporate partners George Bason Jr. and Michael Davis; executive compensation partner Jeffrey Crandall; tax partner Kathleen Ferrell; environmental law counsel Betty Moy Huber; antitrust partner Ronan Harty and counsel Michael Sohn. Associates are Daniel Borlack, Jennifer Pinchevsky and Brian Snyder.

Former Davis Polk attorney Jack Campo serves as Smith & Nephew’s chief legal officer.

ArthroCare, meanwhile, has turned to Latham & Watkins. The firm’s team is led by Silicon Valley corporate partners Michael Hall and Josh Dubofsky, as well as Orange County corporate partner Charles Ruck. New York partner Wesley Holmes advised on securities and finance matters. Additional partners in Silicon Valley, Orange County, Washington and San Francisco are corporate partner David Lee, compensation and benefits partner James Metz, intellectual property partner J.D. Marple, tax partner Kirt Switzer; antitrust partners Michael Egge and Amanda Reeves; health care regulatory partners John Manthei and Stuart Kurlander; and securities and finance partners Joel Trotter and Wesley Holmes. Latham associates are Una Au, Jason Cruise,Timothy Dawe, Aneta Ferguson, Darren Guttenberg, Jessica Munitz, John Raney, Elizabeth Richards, Brett Urig, Ashley Wagner and Michael Young.

Richard Rew II serves as ArthroCare’s general counsel.

Ropes, Weil Advise on $1.15 Billion Semiconductor Materials Acquisition

Entegris said Tuesday it has agreed to buy ATMI, a rival supplier of materials to the semiconductor industry, in a deal worth $1.15 billion.

Ropes & Gray is advising Entegris, while and Weil, Gotshal & Manges is taking the reins for ATMI.

The deal calls for Entegris to pay $34 in cash for each share of Danbury, Conn.-based ATMI, a price that represents a premium of 26.3 percent over ATMI’s Monday closing price. Entegris, which has its headquarters in Billerica, Mass., added that the deal is valued at roughly $850 million when the cash acquired from ATMI in the deal is taken into account, including net proceeds from the recent $170 million sale of ATMI’s life sciences unit to Pall Corporation.

The ATMI deal, which is expected to be completed in the second quarter of this year, is subject to the approval of regulators as well as ATMI shareholders. The transaction is also subject to the closing of the deal between ATMI and Pall, which was announced in December and is expected to close sometime this quarter. Once it is completed, Entegris expects the acquisition of ATMI to result in annual savings of roughly $30 million.

Bloomberg notes that a drop in demand for some of the materials ATMI sells to companies that produce semiconductor chips led the company to hire Barclays Capital in November to seek out strategic opportunities. The subsequent sale is the latest example of consolidation among suppliers of semiconductor materials as a downturn in the chip-making industry has resulted in fewer orders being sent out to suppliers.

The Weil team advising on Tuesday’s deal includes New York-based corporate partners Thomas Roberts and Matthew Gilroy. Other New York lawyers are tax partner Mark Hoenig, employee benefits partner Paul Wessel, and antitrust counsel Vadim Brusser. Partners in Silicon Valley, Washington and Dallas are technology and IP transactions partner John Brockland; environmental law partner Annemargaret Connolly; and finance partner Richard Ginsburg. Weil associates on the deal are Adrienne Baker, Daniel Birnhak, Mark Dundon, Thomas Goslin, Clinton Hutchings, Renee Pristas, Faraz Rana and Jennifer Waisberg.

ATMI’s chief legal officer is Patrick Shima.

Ropes corporate partner Craig Marcus is leading a team advising Entegris that includes debt finance partner Thomas Draper, tax partner Eric Elfman, executive compensation partner Renata Ferrari, environmental law partner Peter Alpert and government enforcement partner James Dowden. All are in Boston, and Marcus splits his time between Boston and New York.

Peter Walcott serves as general counsel for Entegris.