Medtronic Rounds Out Heart-Failure Offerings With HeartWare Buy

The struggling stock of cardiac device maker HeartWare International (HTWR) nearly doubled Monday after Medtronic (MDT) said it would buy the company for $1.1 billion.

Medtronic agreed to pay $58 a share in cash for HeartWare, which closed Friday at 29.97 and soared 93% to 57.79 Monday.

HeartWare makes the world’s smallest ventricular assist device for heart failure, the HVAD, but its stock has taken a beating over the last year due to a failed attempt at acquiring another company last year, as well as trial problems with its next-generation MVAD device.

“Given the above issues, HeartWare is currently losing market share,” said Evercore ISI analyst Vijay Kumar in an email to clients. “That being said, we believe that this acquisition makes sense for Medtronic over the medium term, as it adds another growth driver and rounds out the company’s cardiovascular offering (broadest in the industry).”

HeartWare CEO Doug Godshall said in a statement that he believes having Medtronic’s infrastructure “should help accelerate the development and introduction of our innovative pipeline products, and will expand access to our therapies and offerings to the sizable heart failure population.”

Medtronic expects the deal to have no significant impact on near-term financials, as HeartWare’s 12-month sales are just $262 million compared to Medtronic’s $28.83 billion.

The deal continues a trend of consolidation in the cardiac-device industry. Last year, St. Jude Medical (STJ) acquired Thoratec, a HeartWare competitor, and now St. Jude itself is being acquired by Abbott Laboratories (ABT).

Medtronic closed down 1.1% at 82.38 on the stock market today. The shares have been trading near new highs lately, though they sold off along with the rest of the market Friday. Medtronic boasts a strong overall Composite Rating of 90.

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