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Just days before the holiday, Little Canada-based St. Jude Medical announced two acquisitions worth a combined $550 million that analysts say should help position the medical device manufacturer for future growth.
On Monday, St. Jude Medical said it had signed a definitive merger agreement to acquire MediGuide Inc., an Israeli company, for $283 million in cash and $17 million in assumed debt.
MediGuide makes tiny sensors for developing 3-D images of internal anatomy, which doctors can use for navigation purposes as they provide treatment. St. Jude believes the system will be a good fit with the company's products to treat a common heart rhythm problem called atrial fibrillation -- an area that has seen dramatic sales growth in recent years.
"MediGuide's navigation technology is the result of 30 years of intense development in Israel for jet fighter-pilot applications," said Daniel Starks, St. Jude's chief executive, during a conference call with investors Monday. "MediGuide has devoted the last eight years full time under exclusive license to apply this technology to intra-body navigation in the context of catheter and other minimally invasive medical procedures."
On Sunday, St. Jude said it would spend $250 million in cash to acquire Radi Medical Systems, a Swedish manufacturer of cardiovascular devices. Among other things, Radi Medical makes "vascular closure" products used to seal off the point where
doctors feed catheters into the body so they can perform certain heart procedures.
Peter Bye, an analyst with Jefferies & Co., wrote to investors Monday that the deal marked the second such acquisition for St. Jude's vascular closure business in the past five months. That business has seen significant growth since St. Jude acquired it in 1999, said John Heinmiller, the company's chief financial officer, in an interview.
Joanne Wuensch, an analyst with BMO Capital Markets, wrote Monday in a note to investors, that the pre-Christmas acquisitions "appear to follow the company's pattern of building its franchise through small, technology-based companies that could broaden the long-term growth potential of the company."
She added: "Both acquisitions were funded with cash on hand outside the U.S., and the proceeds of a new three-year term loan."
Shares of St. Jude Medical closed Monday down 51 cents at $32.23.
Christopher Snowbeck can be reached at 651-228-5479.
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