St. Jude Medical Inc. will acquire AGA Medical Holdings Inc. for $1.1 billion in a cash-and-stock deal that it hopes will boost its portfolio of products that fix heart defects.
The purchase should help Little Canada-based St. Jude diversify away from its bread-and-butter offerings of pacemakers and implantable cardioverter defibrillators, a mature market with limited growth.
Plymouth-based AGA makes a variety of patches and plugs to fix holes and other structural defects in the heart in minimally invasive ways. That market, while currently small, has tremendous potential.
AGA "has a strong core business with an enviable pipeline of products and clinical trials," said Daniel Starks, St. Jude's chief executive. St. Jude also will assume about $225 million in debt, bringing the total value of the deal to $1.3 billion.
AGA stock shot up more than 40 percent to close Monday at $20.70, just below the proposed purchase price of $20.80. St. Jude stock was up 1.8 percent to close at $40.63.
Analysts said the deal makes sense, given St. Jude's search for new avenues for growth.
"St. Jude is clearly trying to line up an opportunity long-term," said Phil Nalbone, an analyst with Wedbush Securities in San Francisco. "It's a step in the right direction in terms of diversification."
St. Jude is the second-biggest maker of pacemakers and defibrillators, after Fridley-based Medtronic, Inc. Natick, Mass.-based Boston Scientific Corp., which has a manufacturing facility in the Twin Cities, is in third place.