HeartWare International Inc (NASDAQ:HTWR) shares were up 92.76% to $57.79 on Tuesday, giving back 0.22% of its gains in after-hours trading.
HeartWare International develops and manufactures small implantable heart pumps or ventricular assist devices to treat patients suffering from advanced heart failure. The company has a market cap of $916.74 million at 17.54 million shares outstanding. Shares have been trading in a 52-week range of $25.01 to $94.15.
HeartWare International shared that it has agreed to be acquired by medical device maker Medtronic for $1.1 billion or $58 for each share of HeartWare stock outstanding. This represented roughly a 98% premium over the stock’s closing price last week at around $30.
According to Medtronic, the deal is expected to close during their fiscal second quarter by the end of October 2016. Prior to this, Medtronic also made an acquisition of Israel’s Mazor Robotics and Smith & Nephew Plc’s gynecology unit. Other healthcare companies have also been making mergers and acquisitions to leverage product offerings and marketing capabilities.
For HeartWare International, its main challenge is in the development of its MVAD System, which is a next-generation heart pump that is 40% smaller than their earlier HVAD System. The HVAD System is its flagship product which is a less-invasive procedure that assists with blood flow when the heart is unable to pump blood efficiently.
The latter MVAD System has shown issues related to clotting side effects in clinical trials, weighing on the company’s stock for the past few weeks. Still, HeartWare International remains the second largest market player in the heart pumps market in the US, next to St. Jude Medical Inc’s Thoratec unit.
Medtronic believes that there’s plenty of room for growth in the global heart pump market, possibly reaching $800 million and growing by mid to high-single digit percentage terms this year and the next. The company expects this industry to grow in the high-single to double-digit percentage terms thereafter.
DISCLAIMER: There is a substantial risk of loss with any speculative asset, especially small cap stocks. The opinions expressed are those of the author, and do not constitute recommendations to buy or sell a stock. Do your own research before committing capital.