Yesterday, Abbott (ABT) agreed to acquire 90% of the outstanding equity of Evalve, Inc. that it has not yet accquired, for up to $410 million. The accquisition will move ahead with an upfront payment of $320 million, and a $90 million payment on the achievement of certain regulatory milestones.

Evalve is the global leader in the development of devices for minimally invasive repair of cardiac mitral valves. The company’s MitraClip system is used to clip the leaflets of the mitral valve together to reduce regurgitation.

Mitral regurgitation, a condition that prevents the mitral valve from closing completely, is the most common type of heart valve insufficiency in Europe and the United States. The condition is traditionally treated through open heart surgery, but only 20% of the 600,000 patients diagnosed in the U.S. and Europe each year go for surgery.

However, with the availability of Evalve’s MitraClip system, physicians can now offer their patients a minimally invasive alternative to open heart surgery. MitraClip is currently approved in Europe for non-surgical mitral valve repair in patients suffering from mitral regurgitation. The device is under clinical trials in the U.S.

The Evalve business should be a good addition to Abbott’s vascular products business, which posted sales of $2.2 billion in 2008. The acquisition of Evalve should not only expand Abbott’s medical devices portfolio, it should also help the company establish a presence in the non-surgical market for the treatment of structural heart disease.

Abbott maintained its previously issued guidance for 2009 and expects the transaction to close in the fourth quarter of 2009. We have a Neutral rating on Abbott. The company’s primary competitors in the vascular products market include Johnson & Johnson (JNJ), Medtronics Inc. (MDT) and Boston Scientific (BSX).
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