St. Jude buys two CV medical device makers for $550M

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St. Jude dips into the interventional realm with two major purchases. Image Source: VR Business Brokers  

St. Jude Medical has completed its acquisition of Radi Medical Systems for $250 million in cash and MediGuide, including the 41.3 percent interest owned by Elbit Systems, for $283 million in cash and the assumption of net liabilities totaling approximately $17 million.

With the first transaction, Radi will become part of the St. Jude cardiovascular division. The transaction is expected to be neutral to St. Jude’s consolidated earnings per share in 2009 and is expected to be positive to consolidated earnings per share beginning in 2010. St. Jude said it funded the acquisition with cash on hand outside the United States, as well as with the proceeds from a new three-year term loan established recently with a syndicate of banks.

Terms of the MediGuide transaction provide for St. Jude to pay $138 million of the purchase price in December, with the balance due in two subsequent payments of $111 million in November 2009 and up to $34 million in April 2010, St. Jude said.

The Radi “acquisition will accelerate the expansion of St. Jude Medical's cardiovascular growth platform and benefit the customers, employees and shareholders of both companies,” said Daniel J. Starks, chairman, president and CEO of St. Jude. “We look forward to capturing strategic synergies through this acquisition and further expanding our investment in our cardiovascular division technology, products and programs.”

Radi currently develops interventional cardiovascular medical devices in which St. Jude does not. For 2008, Radi is expected to generate approximately $80 million in sales, a 19 percent increase over 2007, according to the St. Paul, Minn.-based St. Jude.

“We believe MediGuide's proprietary technology may also extend across a variety of other product categories, including cardiac rhythm management, interventional cardiology, neurology and structural heart disease,” said Daniel J. Starks, chairman, president and CEO of St. Jude.

 The Haifa, Israel-based MediGuide develops a navigation system, the Medical Positioning System (gMPS), that uses proprietary technology for real-time tracking of sub-millimeter sized sensors, which can be mounted on needles, guidewires, catheters, or other medical devices used for minimally-invasive intra-body navigation.

The 3D position and orientation of the sensors can be calculated in real time and projected graphically on a fluoroscope, CT, MRI, ultrasound or 3D reconstructed image of the anatomy. The gMPS system is intended to provide a solution for motion artifacts caused by patient heartbeats, respiration, or other movements. MediGuide said that the goal of its gMPS system is to increase the accuracy and amount of information available to a physician during a catheterization or other minimally invasive procedure. MediGuide's gMPS technology and its gMPS enabled guided measurement catheter have the CE Mark, but are only limited to investigational use only in the United States.