NEW YORK (TheStreet) -- Shares of Medtronic (MDT) - Get Report are declining 1.87% to $81.70 in early-morning trading on Monday after agreeing to buy HeartWare (HTWR) for about $1.1 billion in a move that will bolster its portfolio of devices to treat heart diseases.
The medical device maker will pay $58 per share in cash, representing a premium of 93.5% to HeartWare's Friday close of $29.98. Before today, HeartWare shares had tumbled 60% during the past year amid falling sales, issues with product studies and an acquisition that was ultimately terminated but nonetheless viewed as dilutive to HeartWare, the Wall Street Journal reports.
HeartWare stock is spiking 91.74% to $57.49 on heavy trading volume this morning.
The acquisition grants Medtronic additional diagnostic tools and treatments for heart failure, the companies said in a statement.
The deal is expected to close during Medtronic's second fiscal quarter ending October 28. Medtronic doesn't expect to adjust its 2017 revenue or per-share earnings guidance due to the transaction, but the acquisition is expected to be accretive to earnings in its third year.
Separately, TheStreet Ratings team rates the stock as a "buy" with a ratings score of A-.
Medtronic's strengths such as its compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and reasonable valuation levels. We feel its strengths outweigh the fact that the company shows weak operating cash flow.
You can view the full analysis from the report here: MDT
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.