Medtronic Agrees to Acquire Bio-Medicus
Cardiac pacemaker giant Medtronic Inc. said Friday that it had agreed to buy Bio-Medicus Inc. for $190 million in a bid to diversify its line of cardiovascular medical devices.
The two biotechnology companies settled on a stock swap worth $25 a share to Bio-Medicus shareholders, but the value and stock swap ratio could change, based on fluctuations in Medtronic’s stock price.
Bio-Medicus’ board accepted the bid in a meeting Thursday night, hours after Medtronic sweetened its bid. Medtronic’s initial offer would have given Bio-Medicus shareholders a value of about $21.63 a share.
The agreement is subject to approval by Bio-Medicus’ shareholders and Medtronic’s board, reaching a definitive agreement, qualification for pooling of interests accounting treatment and regulatory approvals. In addition, Medtronic could kill the deal if its own stock price falls below $72.50 a share, the companies said.
Medtronic fell $3.125 a share to $76.50 in trading Friday on the New York Stock Exchange. Bio-Medicus rose 50 cents a share to $23.625 in over-the-counter trading.
Eden Prairie, Minn.-based Bio-Medicus is the world leader in the $30-million market for disposable blood pumps used during open-heart surgery. Fridley, Minn.-based Medtronic is the largest maker of cardiac pacemakers, but also makes blood oxygenators, other cardiovascular products, drug pumps and other products.
Medtronic this week reported revenue of $837 million for the year ending April 30. Bio-Medicus generated $31 million in sales in the year ending in March.
Bernard McDonagh, an analyst with Piper Jaffray & Hopwood in Minneapolis, said Medtronic’s sweetened offer was a reflection of its success selling blood oxygenators, devices used in conjunction with pumps during surgery. Oxygenator sales were up 40% in the quarter just ended, McDonagh said.
David Duclos, a medical analyst for Minneapolis-based Wessels, Arnold & Henderson, said he thought the acquisition of Bio-Medicus would be good for Medtronic, which has recently been expanding in related medical fields.
The exchange ratio tentatively is set at 3.1 shares of Bio-Medicus common stock for each share of Medtronic stock.
Above a Medtronic stock price of $92, the ratio will adjust to provide $29.68 in value to Bio-Medicus shareholders. Between $72.50 and $77.50, the ratio will adjust to provide $25 in value to Bio-Medicus shareholders. Below $72.50, the ratio will adjust to provide $25 in value to Bio-Medicus shareholders, but Medtronic can elect to kill the deal instead of adjusting the ratio below $72.50.
