Medtronic to Buy HeartWare for $1.1 Billion
June 27 2016 - 8:43AM
Dow Jones News
By Brittney Laryea
Medtronic Plc on Monday said it agreed to acquire HeartWare
International Inc. for $1.1 billion, adding more heart-failure
products to the medical-device maker.
Medtronic will pay $58 a share in cash for HeartWare, a 93%
premium over HeartWare's Friday closing price of $29.98. Before
Monday, HeartWare's stock had fallen 60% over the past year amid
declining sales, problems with product studies and an acquisition-
-- later terminated -- that was seen as dilutive to Heartware.
The companies said Monday that the acquisition gives Medtronic
more diagnostic tools and treatments for heart failure, a condition
where the heart isn't pumping enough blood to meet the body's
needs.
HeartWare makes surgical implants that mimic the heart's
blood-pumping function, known as ventricular assist devices.
Medtronic estimated Monday that the global VAD market is about $800
million currently and is expected to grow by a percentage in the
mid-to-high single digits in the current year and accelerate to a
percentage in the high-single, low-double digit in future
years.
The companies said they expect the deal to close during
Medtronic's second fiscal quarter, ending in late October.
Medtronic said it didn't expect to adjust its fiscal 2017 revenue
outlook or earnings because of the acquisition, and that it
expected the deal to add to earnings in its third year.
In January 2015, Medtronic closed a $50 billion acquisition of
Dublin-based Covidien that combined two of the world's largest
medical supply companies. That deal allowed Medtronic to move its
corporate headquarters from Minneapolis to Dublin in what was
called an inversion, a technique companies can use to lower their
tax burden.
Medtronic, for its fiscal year ended April 29, reported earnings
of $3.54 billion on revenue of $28.83 billion. Heartware, in its
most recent fiscal year ended Dec. 31, had a loss of $72.8 million
on revenue of $276.8 million.
Last year, Medtronic rival St. Jude Medical Inc. agreed to pay
$3.4 billion to acquire Thoratec Corp., another maker of VADs.
Write to Brittney Laryea at brittney.laryea@wsj.com
(END) Dow Jones Newswires
June 27, 2016 08:28 ET (12:28 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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