Tutogen May Get a Facelift

The sluggish stock of Tutogen Medical (TTG ) perked up in mid-March on news that the company had hired investment bank Dominick & Dominick to explore possible moves, including alliances or mergers. Tutogen makes tissue for surgical reconstruction and orthopedic implants. It might be pursued by Sulzer Medica, a Swiss medical device company that already owns 35% of Tutogen. Sulzer, which markets Tutogen products in Europe, had acquired its Tutogen shares from Capital Partners II in January, 2001, at 7.60 a share. The stock now trades at 4.40. According to Tutogen's latest proxy statement, Capital Partners has to sell its remaining 26% stake in Tutogen by yearend as part of liquidating a trust. Sulzer has an option to match any outside bid for the shares, so it's likely to end up buying that 26% stake, giving it a 61% interest. Another company that may emerge as a buyer is Mentor, which markets Tutogen's products in the U.S. and accounts for more than 30% of Tutogen's sales. One big Tutogen investor says Tutogen is worth 10 in a buyout. It had sales in 2001 of $13.2 million and posted a loss of 5 cents a share. Sales in the first quarter, ended Dec. 31, 2001, were $5 million, up 59% from a year ago. Operating profits of $125,000 compared with a loss a year ago. A kicker: Tutogen has a patented tissue-preservation process that ensures infection-free implants. The company may benefit from recent news of infection traced by the Centers for Disease Control to tissue grafts from Tutogen rival, CryoLife, whose stock tumbled on the news. Tutogen says it has never had a contamination problem. A spokes-man says Tutogen wants to stay independent.

By Gene G. Marcial

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