Rethinking Healthcare

St. Jude buy shows strength of market

St. Jude buy shows strength of market

Posting in Finance

Heart care remains a large and growing business, despite health reform, and innovators are continuing to benefit.

When you spend $1.3 billion on an acquisition and your stock price goes up, you are in a hot market.

So it is with St. Jude Medical.

The company best known for pacemakers put that much money into AGA Medical, which makes a line of products dubbed AMPLATZER which aim to allow more heart procedures to be done using catheters, as opposed to opening up the chest.

About $1 billion is going to buy the stock, the rest is going to assume debt, and St. Jude is assuring its stock price stays high with a stock buy-back timed to coincide with the deal.

(The picture of an AMPLATZER occluder at the right comes from the FDA.)

The product line name comes from co-founder Dr. Kurt Amplatz, who is now retired and a philanthropist. The other co-founder, Franck Gougeon, can now join him in philanthropy.

For those who follow corporate strategies, this follows St. Jude's placement of a $375 million price tag on CardioMEMS, a wireless heart implant outfit, and shows the company wants to go well beyond pacemakers, which are a mature technology.

Unlike some deals you may read about, where an offer is just an offer, this looks like a done deal. AGA is privately held, and both its founder and private investors have approved the deal.

Both companies are based in Minnesota so integration should not be a problem.

Along with technology, sales, and a trained team, St. Jude also inherits a legal dispute in this deal. AGA filed a patent suit against competitor W.L. Gore in August. (Yes, Gore is the GORE-TEX company, but they have been in the medical equipment area for some time.)

The bottom line is that heart care remains a large and growing business, despite health reform, and innovators are continuing to benefit.

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Dana Blankenhorn

Contributing Editor

Contributing Editor Dana Blankenhorn has written for the Chicago Tribune, Advertising Age's "NetMarketing" supplement and founded the Interactive Age Daily for CMP Media. He holds degrees from Rice and Northwestern universities. He is based in Atlanta. Follow him on Twitter. Disclosure