On October 10, 2022, the Company and Orca Merger Sub Inc., a wholly-owned subsidiary of Orthofix (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with SeaSpine, a global medical technology company focused on surgical solutions for the treatment of spinal disorders. On January 5, 2023, the transaction was completed and Merger Sub was merged with and into SeaSpine (the “Merger”), with SeaSpine continuing as the surviving company and a wholly-owned subsidiary of Orthofix following the transaction. For the year ended December 31, 2022, the Company incurred approximately $9.3 million in acquisition-related costs, substantially all of which was classified as general and administrative expenses.

As a result of the Merger, each share of common stock of SeaSpine issued and outstanding immediately prior to the closing date was converted into the right to receive 0.4163 shares of common stock of Orthofix. In addition, the Company assumed SeaSpine’s existing equity incentive plans in connection with the Merger, and outstanding SeaSpine equity awards were converted into Orthofix equity awards (on the same vesting schedule and other terms and conditions as existed prior to such conversion). The conversion of such equity awards occurred at the same exchange ratio as applied to SeaSpine common stock in the Merger, and the exercise price of converted SeaSpine stock options was also correspondingly adjusted.

The Merger is being accounted for as an acquisition of SeaSpine by Orthofix under the acquisition method of accounting for business combinations in accordance with U.S. GAAP. Thus, Orthofix is treated as the acquirer for accounting purposes. In identifying the acquirer, Orthofix and SeaSpine considered the structure of the transaction and other actions contemplated by the Merger Agreement, relative outstanding share ownership, and market values, the composition of the combined company’s board of directors, and the relative size of Orthofix and SeaSpine.

The total estimated fair value of consideration associated with the Merger as of the acquisition date was comprised of:


(U.S. Dollars, in thousands, except shares and price per share)
Share Consideration:
Orthofix common shares to be issued in exchange for SeaSpine common shares		16,104,854
Orthofix closing price per share as of January 4, 2023	$	22.76
Estimated fair value of shares issued in exchange for SeaSpine common shares	$	366,546
Estimated fair value of Orthofix stock options and RSUs issued in exchange for outstanding SeaSpine equity awards		11,508
Total estimated fair value of consideration	$	378,054

Pursuant to the Merger Agreement, the outstanding equity awards of SeaSpine (including stock options and restricted stock units) were exchanged for awards of Orthofix. The Company issued 1,889,812 options to purchase shares of Orthofix common stock and 490,338 shares of time-based vesting restricted stock in the conversion of such awards. The estimated fair value of the portion of the SeaSpine awards for which the required service period had been completed at the time of the acquisition was treated as

purchase consideration. The remaining estimated fair value will be recorded as compensation expense over the remainder of the service period associated with the awards.

As of the date the consolidated financial statements were available to be issued, the Company was in the process of determining a preliminary allocation of the total estimated fair value of consideration to the fair value of the net assets acquired and residual goodwill; however, such allocation has not yet been finalized. A preliminary allocation of the purchase price to assets acquired and liabilities assumed will be reported in the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2023; however, such allocation will be subject to completion of the Company’s valuation of the assets acquired and liabilities assumed, which the Company expects to complete within one year from the acquisition date.

In connection with the Merger, immediately after the closing of the acquisition on January 5, 2023, Orthofix repaid on behalf of SeaSpine all of the outstanding obligations in respect of principal, interest and fees under an Amended and Restated Credit Agreement, dated July 27, 2018, among SeaSpine and Project Maple Leaf Holdings ULC, as guarantors, and SeaSpine Orthopedics Corporation, SeaSpine, Inc., ISOTIS, Inc., SeaSpine Sales LLC, ISOTIS Orthobiologics, Inc., Theken Spine, LLC, SeaSpine Orthopedics Intermediate Co, Inc., 7D Surgical USA Inc. and 7D Surgical ULC, as borrowers, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent, and terminated all applicable commitments under such agreement.

In addition, on January 3, 2023, the Company borrowed $30.0 million under its $300.0 million secured revolving credit facility for working capital purposes, including to fund certain merger-related expenses. Further, an additional $15.0 million was borrowed on March 3, 2023.