HeartWare International (HTWR) to Be Acquired by Medtronic Plc in $1.1B Deal

Shares of HeartWare International, Inc. (HTWR) were trading up +27.43 or +91.49 percent in Monday’s premarket after news that the company would be taken over by Medtronic Plc (MDT) in a transaction valued at $1.1 billion. HeartWare International stock closed at $29.98, down -3.17 or -9.56 percent in Friday’s regular trading session.


Stock Analysis

Framingham, Massachusetts based HeartWare International, Inc. is a medical device manufacturer specializing in miniaturized implantable heart pumps or ventricular assist devices for the treatment of advanced heart failure.
HeartWare’s Ventricular Assist System is the world’s smallest full support ventricular assist device system. The system includes a blood pump, surgical tools and patient accessories. The HVAD Pump is a full output continuous flow blood pump with a capacity of 10 liters per minute designed to be implanted next to the heart, therefore avoiding abdominal surgery, a requisite for other similar devices. HeartWare operates manufacturing and distributing facilities in Miami Lakes, Florida, Arden Hills, Minnesota and Hannover, Germany.

Founded in 1949 in Minneapolis, Minnesota, Dublin, Ireland based Medtronic Plc is the world’s largest medical device and medical technology development company. The company holds over 53,000 related patents and employs 85,000 people in more than 160 countries. Medtronic Plc maintains its operational headquarters in Fridley, Minnesota and the company stock is a component of the S&P 500.

Early this morning, the two companies announced a definitive merger agreement that will have Medtronic Plc pay $58.00 per share for all outstanding HeartWare common stock in a transaction valued at $1.1 billion. The amount is almost double HeartWare stock’s closing price of $29.98 on Friday. The deal was approved by the boards of both companies and is expected to close by Medtronic’s second quarter which ends on October 28th, 2016.

In this morning’s joint press release, Doug Godshall, President and Chief Executive Officer or HeartWare noted that, “Combining the unique capabilities of the HeartWare team, which has been entirely focused on mechanical support technologies, with the broad strength of the Medtronic organization provides a unique opportunity to enhance growth in the mechanical circulatory support market. All of our stakeholders, including customers, employees, shareholders, and most importantly, patients, will benefit meaningfully from this complementary combination.”

The acquisition will expand Medtronic’s portfolio of therapies and services for patients suffering from heart failure, offering less invasive mechanical support options. Heart failure is a leading cause of hospitalization  and death in the United States, affecting over five million people. Expenditures for heart failure in the U.S. are estimated to be over $39 billion per year.

Medtronic estimates that the worldwide markets for ventricular assist devices is currently about $800 million and expects growth of mid to high single digits for 2016-2017 and accelerate to high single, low double digits after 2017. Medtronic estimates that patients suffering from heart failure could reach eight million by 2030.

Medtronic expects minimal to no net earnings per share dilution for the first two years, with the company offsetting the expected dilutive impact. Medtronic does not intend to modify its guidance for its fiscal 2017 year as a result of the transaction which is expected to be accretive to earnings in the third year after closing.

Other News About HTWR

HeartWare Completes Enrollment In HVAD® System LATERAL Study

Company enrolled 145 patients in 30 hospitals for the study.

HeartWare reports 1Q loss

HeartWare reported a loss of -$1.00 per share in the first quarter.

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Published on Jun 27, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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