- Medtronic announced on Monday it has entered into a definitive merger agreement to acquire health failure device manufacturer HeartWare.
- The deal is valued at $1.1 billion.
- The acquisition is expected to close during Medtronic's second fiscal quarter ending Oct. 28. The deal is subject to federal regulatory approval.
Medtronic's acquisition of HeartWare will expand Medtronic's portfolio of diagnostic tools, therapies and services for patients suffering from heart failure. Boston Business Journal reported the deal is the second medical device acquisition for Medtronic. In 2015, Medtronic completed the purchase of Covidien, a cash-and-stock deal valued approximately at $49.9 billion.
The deal follows Abbott Laboratories' April announcement it agreed to buy St. Jude Medical in a cash-and-stock deal worth $25 billion. The proposed merger would bring together Abbott’s expertise in coronary intervention valve repair and St. Jude’s forte in heart failure devices, catheters and defibrillators — with roughly $8.7 billion in annual sales for Memphis, TN-based medical device manufacturer.
The Abbott/St. Jude Medical acquisition comes after St. Jude's $3-billion acquisition of Thoratec, a manufacturer of devices for heart failure, was finalized last October.
Both mergers are line with the types of partnerships a recent Kaufman, Hall & Associates report viewed as key strategies for healthcare entities to “enhance competencies and scale to provide coordinated, cost-effective care across the continuum."
The Medtronic/HeartWare transaction is expected to meet Medtronic's long-term financial metrics for acquisitions. Medtronic does not intend to modify its fiscal year 2017 revenue outlook or earnings per share guidance as a result of this transaction, although it is expected to provide increased confidence in the company's ability to deliver on its FY17 revenue growth outlook, a prepared statement from the company noted.
In addition, Medtronic expects minimal to no net EPS dilution from this transaction for the first two years as the company intends to offset the expected dilutive impact. Medtronic stated the deal is expected to be earnings accretive in year three.