Combined entity will have an extensive orthobiologics portfolio.

Integra LifeSciences plans to acquire IsoTis in an all cash transaction valued at approximately $51 million. Integra will pay $7.25 for each share of IsoTis common stock. IsoTis opened trading today at $6.9.

“This combination brings together two well-respected industry leaders in the regenerative medicine marketplace,” remarks Stuart Essig, Integra’s president and CEO. “Both Integra and IsoTis provide some of the most advanced technology addressing surgeons’ needs. By combining our companies’ complementary, best-in-class products and technologies, we expect to drive enhanced revenue growth and value creation.”

Integra reports that this combination creates a comprehensive orthobiologics portfolio. The company also points to cross-selling opportunities and enhanced revenue growth because of extensive channel coverage in neurosurgery, spine, and extremity reconstruction markets.

Upon closing, IsoTis  will become a wholly-owned subsidiary of Integra. The combined company will have operations in North America and Europe with more than 2,000 employees, including approximately 300 sales and service professionals and over 500 employees in Europe.

“While the transaction will be dilutive to reported earnings for several quarters as we restructure the business, we expect the restructuring activities surrounding the IsoTis acquisition to generate projected pre-tax cost savings of approximately $9 to $11 million per year for 2008 and beyond, as compared to IsoTis’ historical 2006 results,” notes Essig. “Substantial savings will come from the reduction of public company costs, duplicative board and executive management costs, redundant insurance costs, and reduced advisory, legal, and accounting fees. Additionally, by the end of 2008, Integra expects to complete the integration of IsoTis’ marketing, product development, administrative, and logistics functions into Integra’s existing infrastructure and generate additional cost savings.”

Integra expects to incur pre-tax charges related to these activities of approximately $3 to $5 million. These charges are expected to be incurred during the fourth quarter of 2007 and the first half of 2008, depending upon the actual closing date of the transaction.

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