Medtronic Plc said it would buy HeartWare International Inc for about $1.1 billion, bulking up its portfolio of devices for treating heart diseases and pushing deeper into the market for less-invasive surgical products.
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Medtronic will pay $58 a share in cash for HeartWare, a 93% premium over HeartWare’s Friday closing price of $29.98. Both companies’ respective boards of directors have already unanimously approved the acquisition, which is set to close in Medtronic’s second fiscal quarter – which ends on October 28.
HeartWare shares jumped more than 90 percent in early trading, while Medtronic shares were down 2 percent amid a broader market sell-off. Meanwhile, Medtronic’s shares were down 1.86 percent to $81.71 per share.
HeartWare, which makes miniaturized ventricular assist devices created to assist cardiac function, is based in Framingham Massachusetts. In data published in 2010, the National Center for Biotechnology Information estimated heart failure expenditures to be $39 billion per year in the United States. HeartWare’s flagship product is a ultrasmall ventricular assist device that is created to reduce the invasiveness of heart surgery and improve patient recovery times and outcomes. “This transaction, once closed, will be a further, important step toward Medtronic offering a complete suite of solutions to address patient needs across the heart failure care continuum”.
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Medtronic said it does not expect to change its fiscal year 2017 revenue or earnings per share projections. Instead, the company said that the transaction with Heartware gives it “increased confidence” that it can hit its previously announced revenue growth target.
