Stryker Buys Vocera

On Thursday Stryker announced that they are buying Vocera Communications for $3 billion. Here is a high-level description of the business: "Vocera caters to nearly 1 900 hospitals, allowing healthcare workers to communicate and collaborate with co-workers and engage with patients and their families". Looking at their website, they seem to be a hospital management system making it easy for staff members to interact with each other and have easy access to patient information.

Stryker has a powerful brand and an extensive sales network. Their business model is to buy bolt-on companies, allowing the acquisition to take advantage of the Stryker brand and sales team. The Vocera purchase will complement Stryker's Advanced Digital Healthcare division. With an increase in the digitisation of the medical industry, it makes sense for Stryker to bolster this part of its business.

Stryker paid a big premium for Vocera, but the acquisition is only 3% of their market cap. Vocera looks like a good fit and shows Stryker is adding some diversity away from their core medical devices business. We endorse this transaction.