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April records series of device industry mergers.

April was a month of medical device mergers. Though the deals may not be what some would consider "big-ticket" buyouts, some of the industry's biggest players were the ones writing the checks.

Boston Scientific and CryoCor

On April 16, Natick, MA-based Boston Scientific announced plans to purchase San Diego, CA-based CryoCor in a cash deal worth approximately $17.6 million or $1.35 per CryoCor share.

The acquisition follows a development agreement in place since June last year to pursue therapeutic solutions for atrial fibrillation, the most common cardiac arrhythmia.

The existing development agreement involves the development of a console to deliver cryo energy to Boston Scientific's proprietary cryo balloon catheter, which is being developed to provide a safe and broadly applicable method to isolate the electrical activity originating from the pulmonary veins--believed to be a source for the initiation and propagation of atrial fibrillation.

"In the current development project, CryoCor's console demonstrated its ability to efficiently deliver nitrous oxide to our proprietary cryo balloon catheter," said Fred Colen, executive vice president, Operations and Technology, for Boston Scientific's Cardiac Rhythm Management division. "This acquisition will allow us to further refine this base console technology, and gaining exclusive rights to CryoCor's family of intellectual property will provide us a key strategic advantage. This is a good example of our Cardiac Rhythm Management and Electrophysiology teams working together to advance our most promising technologies and to potentially make new [atrial fibrillation] solutions a reality for electrophysiologists and their patients."

Ed Brennan, CEO of CryoCor, said he was pleased to see his company's technology and intellectual property partnered with "one of the world's leading electrophysiology companies."

The merger is expected to close this quarter.

Natus Medical & SonaMed

On April 15, Natus Medical said it would acquire privately held SonaMed Corp. Waltham, MA-based SonaMed manufactures the Clarity Screener and associated disposable supplies for hearing loss screening in newborns. Natus Medical, headquartered in San Carlos, CA, manufactures products used for the screening and treatment of hearing impairment, neurological dysfunction, epilepsy, sleep disorders and newborn care.

Natus Medical will purchase all outstanding shares of SonaMed stock in an all-cash transaction. The agreement has received the approval of the boards of directors of both companies and is subject to the approval of SonaMed stockholders and customary closing conditions. Precise terms of the deal were not disclosed; the deal is expected to close within the quarter.

SonaMed reported revenue of $3.5 million for its 2007 fiscal year.

Jim Hawkins, president and CEO of Natus Medical, characterized SonaMed as a "well run" company that has been consistently profitable, adding that he expects the acquisition to be accretive to earnings in the first full quarter of ownership.

"We expect the Clarity screener to fill out our product line in newborn hearing screening," Hawkins added. "With two-thirds of SonaMed's revenue coming from disposable supplies, combined with their high gross-profit margin, we believe this is an ideal fit for our business model."

Earlier in the month Natus announced plans to sell 770,000 shares of its common stock at a public offering price of $18.27 per share, resulting in net proceeds of approximately $13.4 million. Officials said the money raised would be used for general corporate purposes, including the financing of potential acquisitions, capital expenditures and working capital needs.

St. Jude Medical & EP MedSystems

On April 9, St. Jude Medical, Inc. of St. Paul, MN unveiled a deal to acquire EP MedSystems for approximately $92.1 million. Under terms of the agreement, EP MedSystems shareholders will receive $3 for each EP MedSystems share they own, with the option of receiving cash or St. Jude Medical common stock.

The cash and stock elections are subject to pro-ration such that St. Jude Medical will issue 40% of the total merger consideration in St. Jude common stock and 60% in cash.

The companies anticipate the deal's close during the third quarter of 2008.

St. Jude expects the purchase to immediately add two new growth drivers to its program for products used in atrial fibrillation and other electrophysiology catheterization procedures. The transaction also speeds the company's entry into the high-growth intracardiac ultrasound echocardiography (ICE) market with the EP MedSystems ViewMate II intracardiac ultrasound system and the ViewFlex Plus ICE catheter scheduled for market release this quarter. This market segment is growing at an estimated 25%-30% per year and includes both electrophysiology and interventional cardiology applications, according to St. Jude.

Full-year 2007 net sales for West Berlin, NJ-based EP MedSystems were approximately $19 million.
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Title Annotation:Top of the News
Publication:Medical Product Outsourcing
Date:May 1, 2008
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