The 30 day go-shop period in St. Jude Medical's (St. Paul, Minn.) proposed $3.4 billion bid to acquire Thoratec (Pleasanton, Calif.) has expired, both companies said on Friday. Since there were no other potential bids, St. Jude is now one step closer to becoming one of the top players in the heart failure device space. Thoratec's stock (NASDAQ:THOR) was virtually unaffected Friday, trading at $62.56, down 24 cents in triple the average trading volume. St. Jude's shares (NYSE:STJ) were down $2.28 at $68.02.
St. Jude first announced it would acquire Thoratec last month (Medical Device Daily, July 23, 2015). The all-cash transaction represented a premium of 40.1% compared to $45.34, Thoratec's volume-weighted average trading price for the 30 trading day period ending July 17, and a 35.4% premium to the closing price on Thoratec's last unaffected trading date on July 17 of $46.89.
Thoratec develops Heartmate, a left ventricular assist device (LVAD), which helps the heart pump oxygenated blood throughout the body in patients with end-stage heart failure.
"We expect the deal to be completed in [4Q15]," Kate Stoltenberg, a spokeswoman for St. Jude Medical, told Medical Device Daily. "Further details pertaining to the merger will be made available in the preliminary proxy statement when filed."
Under the go-shop agreement, Thoratec could solicit rival offers for up to 30 days from the announcement of the proposed acquisition. The offer was subject to a $30 million fee if Thoratec terminated the agreement in favor of a superior offer prior to the expiration of the go-shop period. It would be a $111 million fee if a superior offer emerges after Aug. 20.
When news first broke of the acquisition, speculation from analysts ran rampant on whether or not another company would make a counter offer. Analysts offered up Boston Scientific (Marlborough, Mass.), Medtronic (Dublin), Abbott Laboratories (Abbott Park, Ill.), and Johnson & Johnson (New Brunswick, N.J.) as potential bidders.
There was also speculation that companies would bypass Thoratec altogether and pursue its rival, Heartware (Framingham, Mass.).
Ironically in 2009, Thoratec undertook the process to acquire Heartware for $282 million (MDD, Feb. 17, 2009), but called off the proposed buyout following the Federal Trade Commission's decision to challenge the merger in court. At the time, the FTC had accused Thoratec of seeking to maintain a monopoly by eliminating the only significant threat to its dominance of the LVAD, market in the U.S.
During an earnings call earlier this month, Thoratec reported revenues of $128.7 million for 2Q15, a 9% increase vs. revenues of $118.1 million in the same period a year ago. Net income on a GAAP basis was $13.2 million, or 24 cents per diluted share, compared to GAAP net income of $17.4 million, or 30 cents per diluted share, in the same period last year.
"The second quarter continued our trend of improving company and market performance and marked a notable return of revenue growth throughout our business," said Keith Grossman, president/CEO of Thoratec. "We were pleased not only with improved market growth, but also with our competitive position, particularly in the U.S."
Thoratec said it plans to launch its next generation LVAD, Heartmate 3, in Europe in the second half of this year. Heartmate 3 is also being studied in a pivotal trial in the U.S. with a U.S. launch possible in 2017. In addition to Heartmate 3, Thoratec recently received European approval for its Heartmate percutaneous heart pump which provides acute percutaneous support mainly for patients undergoing high risk angioplasty procedures.
Thoratec shipped 3,618 Heartmate II LVADs in 2014, out of an estimated market of about 6,500 implantations per year.