• Biotel (Minneapolis) reported that its board of directors voted to decline the previously reported proposal of Arrhythmia Research Technology (ART; Fitchburg, Massachusetts) to acquire it for $4 a share in cash or 0.154 shares of ART's common stock. The Biotel board said it believes the proposed purchase price is "inadequate" and that this is "the wrong time" to sell the company. Biotel said it has made investments over the past two years in new products and services which are coming into their own, including a new Holter recorder and a new event recorder at its Braemar business. The company said Agility is expected to achieve profitability within the next two or three quarters. Biotel through its wholly owned subsidiaries offers analog and digital Holter recorders and tape playback systems for analog devices. The company also manufactures digital cardiac event recorder products, which record heart functions over a month or longer period to record infrequent events, such as arrhythmia.

• Greatbatch (Clarence, New York) and Enpath Medical (Minneapolis) reported that Greatbatch will acquire Enpath for $14.38 a share in cash, or about $102 million, including assumption of debt. Greatbatch will begin a tender offer for all of Enpath's outstanding shares no later than May 8. Greatbatch is a developer of critical components used in implantable devices and other demanding applications. Enpath is a medical products company that makes single-use medical device products for the cardiac rhythm management (CRM), neuromodulation and interventional radiology markets. Greatbatch said the purchase price will be funded out of its available cash, and the deal is not subject to financing conditions. The transaction is expected to close in late June and has been approved by the boards of both companies.

• HealthSouth (Birmingham, Alabama) has agreed to sell its Surgery Division to Texas Pacific Group (TPG, San Francisco/London) a private investment partnership that was founded in 1992 and currently has more than $30 billion of assets under management, for about $945 million. The purchase price consists of cash consideration of about $920 million and an equity interest whereby HealthSouth has the opportunity to participate in the future success of the newly-formed company. The future consideration is estimated to be worth $25-$30 million assuming a five-year horizon. HealthSouth's Surgery Division is comprised of a network of 139 outpatient surgery centers and three surgical hospitals that provide high quality surgical services to physicians and their patients across the country. The facilities are located in 35 states, with a concentration of centers in California, Texas, Florida, North Carolina, and Alabama. The new company will be among the nation's largest providers of outpatient surgical services, according to HealthSouth. The transaction is expected to be completed in 3Q07, and is subject to customary closing conditions, including regulatory approval.

• Medtronic (Minneapolis) reported exercising its option to acquire the O-arm imaging system assets of Breakaway Imaging (Littleton, Massachusetts). The acquisition brings the O-arm system into a broad portfolio of image guided surgical solutions within the Navigation (Louisville, Colorado) business at Medtronic. The financial terms of the agreement, which is expected to close in June, were not disclosed. "The O-arm represents an important step forward in image-guided surgery for Medtronic's customers and their patients," said Jim Cloar, VP and general manager of the Navigation business at Medtronic. "It will be an essential component in expanding the adoption of minimally invasive spine surgeries and opens the possibility for novel therapies which we believe are the wave of the future." The O-arm imaging system, with a breakable gantry and flat screen detector, provides multi-dimensional surgical imaging. It provides surgeons with 3-D images, as well as multi-plane 2-D, and fluoroscopic imaging. It is intended for use in orthopedic surgical procedures and is in use in more than 20 locations worldwide. The system received FDA clearance in 2005.

• SurModics (Eden Prairie, Minnesota), a provider of surface modification and drug delivery technologies to healthcare, reported signing an expanded corporate technology agreement with St. Jude Medical (St. Paul, Minnesota). SurModics has licensed multiple technologies for use in products being developed in St. Jude's Cardiovascular and Cardiac Rhythm Management divisions. Surmodics said the agreement already covers devices including implantable pacemakers and the changes open up the opportunity for more use of its technology in a wider variety of cardiac devices. Agreement terms were not disclosed. "St. Jude Medical has been a valued customer of SurModics for over 16 years, and this license program takes our companies in exciting new directions," said Bruce Barclay, president/CEO of SurModics. "The agreement establishes a foundation for a broader deployment of our technology platforms. In addition, as our base of technologies has grown, we are delighted that St. Jude will have the ability to incorporate several of them as part of their product development pipeline"