MEDTRONIC: Buys Stent-Maker AVE For $3.7B
Medtronic Inc. chalks up another win in its "buying spree through the medical-device industry" with its announcement that it will pay some $3.7 billion in stock to acquire Santa Rosa, CA- based Arterial Vascular Engineering Inc. (AVE), a leading stent manufacturer. The Wall Street Journal reports that Medtronic will "exchange $54 in Medtronic stock for each AVE share, in what is called a pooling-of-interests transaction." The deal shot AVE shares up 51% to $16.50. The company's sales increased from $17 million three years ago to $387 million in the fiscal year ended June 30, and net profits reached $115.1 million. Analysts estimate that AVE sales could reach $785 million this year, based on the popularity of its stent design (Burton, 12/1). The Santa Rosa Press-Democrat reports that the "company's name will change to Medtronic AVE when the sale is approved by stockholders and completed sometime in the spring" (Lauer, 12/1).
You Might Be Next?
The Minneapolis Star Tribune reports that the deal "caps a five-month string in which" Fridley, MN-based Medtronic "bought five firms for a total of about $8 billion, primarily in stock." It has extended its business from pacemakers to "treatments for a range of health problems," from back pain and neurological disease to heart conditions. In each of those medical sectors, "Medtronic will be among the top tier in market share," the Tribune reports. Revenues are expected to climb from $2.6 billion last fiscal year to more than $5 billion in fiscal 2000. Piper Jaffray analyst David Gruber said of the acquisition, "I think this signals the end to the acquisition spree. They've got their platform for the 21st century built" (Fiedler, 12/1).