Private Equity Firm to Acquire Majority Stake in Leesburg’s K2M

K2M, a Leesburg-based medical device firm developing technologies to treat the human spine, announced that New York private equity firm Welsh, Carson, Anderson & Stowe will acquire a majority stake in the company. Financial terms of the deal, which will keep the company in Leesburg and maintain its current management team, were not disclosed. The firm will join longtime K2M investor Ferrer Freeman & Co. and company management. K2M said that the deal will allow it to expand its worldwide sales force and accelerate research and development. The transaction is expected to close at the end of July. K2M’s products are designed to treat deformity, degenerative, trauma and tumor spinal patients.

July 8, 2010 – K2M, Inc. (“K2M” or the “Company”), a spinal device company developing innovative solutions for the treatment of complex spinal pathologies, and Welsh, Carson, Anderson & Stowe (“Welsh Carson”), a leading private equity firm, have entered into a transaction in which Welsh Carson will acquire the outstanding stock and become the majority shareholder of K2M, along with longtime K2M investor, Ferrer Freeman & Co., and K2M’s management.

Under this agreement, K2M’s global headquarters will remain in Leesburg, Virginia, and the Company will continue to operate under its existing management team led by Eric Major, President and CEO, and Dr. John Kostuik, Chief Medical Officer.  The Welsh Carson investment will allow K2M to substantially scale its business to meet the high demand for its innovative product portfolio by expanding its worldwide sales force and accelerating the research and development of its next generation technologies.

“K2M has proven over the past several years to be one of the most innovative and fastest growing spine companies in the industry.  We are excited to add K2M to our portfolio of medical device companies,” said Paul Queally, Welsh Carson Co-President.

“We are extremely proud that Welsh Carson, a world class private equity firm, has decided to back K2M to serve as the foundation platform to aggressively scale and become a leader in the spine market,” stated Eric Major.  “In a relatively short period of time, we have built a profitable organization that has experienced rapid growth since its inception.  June was another record breaking sales month for K2M.   This strategic transaction will enable us to leverage the success of our existing business and reaffirm our commitment to becoming a leader in the global spine market.  Welsh Carson has the unique combination of investment expertise, industry focus, and capital resources to react quickly to prospective opportunities and provide significant strategic and operational value to K2M.”

Dr. John Kostuik added, “This agreement with Welsh Carson will allow us to expand our R&D efforts and portfolio of differentiated technologies to enhance global patient care, which will always remain K2M’s number one priority.”

The transaction is expected to close at the end of July.  Piper Jaffray & Co. served as the exclusive financial advisor to K2M in this transaction.