St. Jude buy shows strength of market
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.
This post was originally published on Smartplanet.com