A unit of private equity giant Blackstone Group will buy knee and ankle brace maker DJO Inc. for $1.3 billion, the companies said on Monday.
The cash offer of $50.25 per share represents a 19 percent premium over DJO's closing price of $42.10 on Friday.
The deal will bring together DJO and medical device maker ReAble Therapeutics Inc., formerly known as Encore Medical. The companies make complementary orthopedic and pain-management products, DJO said.
A Blackstone affiliate is the controlling shareholder of ReAble. The affiliate will provide the equity financing for the deal.
Biomet Inc., a much larger orthopedic products maker, last month agreed to a sweetened takeover bid of $11.4 billion from a group of private equity firms that includes Blackstone.
The DJO transaction is worth $1.6 billion, including $300 million of assumed debt, and is expected to close in the fourth quarter.
DJO will have to pay ReAble a break-up fee of $18.7 million if the deal falls through. The DJO board has unanimously approved the transaction.
Wachovia Securities is the financial advisor to DJO, while Credit Suisse is advising ReAble and Blackstone.
DJO shares rose $7.41 to $49.51 in morning trade on the New York Stock Exchange.
(Reporting by Kim Dixon in Chicago, Anupreeta Das in New York and Aniruddha Basu in Bangalore)