In a deal that was seemingly engineered by Engaged Capital's Glenn Welling, Medtronic (MDT) will spend about $1.1 billion for cardiac medical device maker HeartWare International (HTWR) about six months after the latter nixed a transaction disliked by its shareholders.
Dublin-based Medtronic said Monday it will commence a tender offer for all outstanding shares of HeartWare common stock for $58 a share in cash, equating to an approximately 93.5% premium over the $29.98 that shares of the target finished at on Friday, June 24.
Shares of Framingham, Mass.-based HeartWare soared about 91.9% to $57.54 during Monday morning's trading session. Medtronic shares retreated about 2.2% to $81.47.
"Medtronic, with HeartWare in place, will be a much more formidable competitor in the long run to the Thoratec franchise of Abbott," said Bruce Nudell of SunTrust by phone on Monday.
The Deal reported in July 2015 that HeartWare was likely to emerge as an attractive takeout candidate after its rival in the ventricular assist device, or VAD market, Thoratec, agreed to be taken out by St. Jude Medical (STJ) for about $3.4 billion. In April, Abbott (ABT) agreed to fork out $30.7 billion including debt for St. Jude.
"Medtronic needed to be in the hands of a bigger company," Nudell went on, noting that the market served by HeartWare and Thoratec remains largely underserved. He added that Marlborough, Mass.-based Boston Scientific (BSX) would have been the only other logical suitor for HeartWare, noting that the medical device company may have passed on the deal given that it has less financial flexibility than Medtronic.