St.Jude Medical‘s (STJ) acquisition of cardiac devices maker AGA Medical Holdings (AGAM) has progressed a step further as it has cleared the key federal antitrust hurdle. The Minnesota-based medical devices major announced on November 10 that its request for an early termination of a federally required 30-day waiting period in relation to the transaction has been granted.
The federal antitrust laws require the submission of the specific fillings to the Federal Trade Commission (“FTC”) and the Antitrust Division of the U.S. Department of Justice by both the parties prior to the closure of the proposed cash-and-stock deal. On submission of the filings, a 30-day waiting period commences, during which, the regulators may request for additional information, helping them assess if the proposed deal violates the U.S. antitrust laws.
St. Jude’s request for early termination was granted with respect to all filings made under the antitrust laws, and consequently, such waiting periods in relation to the acquisition have ended.
St. Jude announced its acquisition of Plymouth, Minnesota-based AGA Medical for $1.3 billion in October 2010. Under the terms of the deal, shareholders of AGA Medical will receive $20.80 (in the form of cash and/or stock) for each share they hold. The consideration will be evenly split between cash and St. Jude common stock. AGA Medical shareholders will be given an option to choose between shares and cash.
The acquisition, which is subject to customary closing conditions and regulatory approvals, is expected to close by end-2010. On successful consummation of the transaction, AGA Medical will be integrated into St. Jude’s cardiovascular division.
AGA Medical specializes in devices for treating structural heart defects and vascular abnormalities with minimally invasive transcatheter treatments with revenues of $199 million in 2009. Many of the company’s products are used to treat heart defects in children. Its coveted AMPLATZER occlusion (closure) devices are currently sold in 112 countries.
AGA Medical has the leading share of the market for structural heart defect occluders. The company has a robust pipeline with a number of products currently under clinical trials. Should they be successful, St. Jude can look forward to blockbuster opportunities.
Consolidation binge among the top-tier U.S. medical devices companies continues as they battle to grab share in mature pacemaker and implantable cardioverter defibrillator (“ICD”) markets. St. Jude, like its peers Medtronic (MDT) and Boston Scientific (BSX), is exploring new avenues of growth by targeting smaller companies with promising growth prospects.
The AGA Medical deal provides St. Jude with the opportunity to expand into fast-growing new therapy areas beyond its legacy ICD and pacemaker markets. The acquisition is expected to considerably strengthen St. Jude’s atrial fibrillation and cardiovascular franchises.
The integration of the complementary product lines will make the combined entity a leading player in the structural heart market. St. Jude expects the acquisition to help its sales grow at a low double-digit rate in 2011. Moreover, the deal is expected to be accretive to earnings starting 2011. We are currently Neutral on St. Jude.
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