Medtronic (MDT) completed its acquisition of ATS Medical, which develops, manufactures and markets medical devices needed for cardiovascular surgery. On April 29 2010, Medtronic had decided to acquire ATS Medical for $4.0 per share or $370 million, including its debt burden. ATS Medical is primarily focused on cardiac surgery, including heart valves and cryoablation technology. Moreover, its Open-Pivot bileaflet mechanical and 3f pericardial valve technology, along with CryoMaze family of ablation products, is expected to extend Medtronic’s current product offerings to cardiac surgeons.

Medtronic earned 18% of its total revenues from the CardioVascular segment in fiscal 2010. We believe this segment is likely to record higher revenues based on certain significant acquisitions in the past few months.

Earlier this year, Medtronic had acquired Invatec, a medical technology player focused on treating cardiovascular diseases, for $350 million. The company also acquired two of Invatec’s affiliated companies: Fogazzi, a provider of polymer technology to Invatec, and Krauth Cardiovascular, a distributor of Invatec products in Germany.  

Invatec’s portfolio of stents, angioplasty balloons and accessory products will complement Medtronic’s CardioVascular business and strengthen its coronary and peripheral product offering. Given the huge potential of the cardiovascular market, Medtronic will be better placed to address unmet clinical needs in the treatment of cardiovascular diseases, the world’s leading cause of death.
Medtronic’s long-term story remains intact; product approvals and launches will drive top line growth. Moreover, the company is leaving no stone unturned to revive its Spinal business through new product launches. Although the company is witnessing pricing pressure in the US market, it earns 41% of its revenues from international operations, especially emerging markets, which hold strong potential. In addition, acquisitions should enable the company to record higher revenues in the forthcoming period.
 
We are currently Neutral on the stock.

 
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