STJ ST. Jude Medical, Inc.

Leading medical devices player Medtronic (MDT) has taken the inorganic route to strengthen its presence in advanced surgical devices. The company recently decided to acquire two companies – Salient Surgical Technologies for $525 million and Peak Surgical for $120 million. Both the transactions are subject to several approvals.

Salient Surgical deals with haemostatic sealing of soft tissue and bone in a variety of surgical procedures including orthopedic surgery, spine, open abdominal and thoracic procedures. Following this deal, Medtronic’s Surgical Technologies portfolio would include Aquamantys system with Transcollation technology. Salient records annualized revenue of about $100 million. Medtronic already holds an ownership stake in Salient, excluding which the transaction value would be approximately $480 million.

Peak Surgical specializes in surgical instruments based on its PlasmaBlade technology. The Peak PlasmaBlade consists of disposable cutting devices with insulation technology that provides accuracy of scalpel and bleeding control with minimal thermal tissue damage. The technology is approved for several applications – Ear, Nose and Throat (ENT), plastic reconstructive, orthopaedic and general surgery.

Peak Surgical’s annualized revenue is $20 million. After taking into account Medtronic’s current stake in Peak Surgical, the transaction value comes to approximately $105 million.

During the last reported quarter, revenues from Surgical Technologies segment increased 9% to $298 million (7% at CER) driven by strong performances across the portfolio of ENT, power systems and navigation product lines, as well as balanced growth across capital equipment, disposables and service.

Medtronic has been looking at diversifying its portfolio over the past few quarters as its core segments – Cardiac Rhythm Disease Management (CRDM) and Spinal have been witnessing several challenges and lower revenues. However, the two recent acquisitions are unlikely to have any significant impact on the top line in near future as Surgical Technologies account for 7% of total sales. The company also faces tough competition from players such as Boston Scientific Corporation (BSX) and St Jude Medical (STJ).

 
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