UPDATE 3-Thoratec to buy Aussie heart-pump maker for $282 mln

Fri Feb 13, 2009 1:33pm EST

(Adds analyst rating and price target; updates share movement)

By Anand Basu

BANGALORE Feb 13 (Reuters) - Cardiac-device maker Thoratec (THOR.O) will buy Australia's HeartWare International HIN.AX for about $282 million in a cash and stock deal, which could give Thoratec a stronghold over the market for machines that help pump blood in patients with a weak heart.

"It's a brilliant move, with the number-two player Ventracor Ltd VCR.AX in financial distress. By acquiring HeartWare, Thoratec has essentially consolidated its market leadership position," SMH Capital analyst Suraj Kalia said.

Australia-based Ventracor, which makes an implantable blood pump called the VentrAssist Left Ventricular Assist Device (LVAD), said it was seeking interest from firms wishing to take a stake or buy the company.

HeartWare also developing a LVAD called the HVAD, which is designed to help a patient's weakened heart pump blood throughout the body by removing blood from the left side of the heart and pumping the blood into the aorta. The pump is designed to rest inside the patient's chest.

"Thoratec is the current leader in developing Left Ventricular Assist devices, and HeartWare has the most exciting next generation products currently in the development," Pacific Growth Equities analyst Duane Nash said.

Thoratec makes implants which are designed for people with severe congestive heart failure and few medical options.

HeartWare was significantly undervalued, and at a premium of about 112 percent, Thoratec gains a longer pipeline and HeartWare gains decades of experience in developing and commercialising these devices, said Nash.

He has a "buy" rating and a price target of $38 on the stock of Thoratec.

Thoratec will also provide HeartWare a convertible loan facility of up to $28 million to fund ongoing operations until the deal closes -- currently expected in the second half of 2009.

Thoratec expects to record deal-related one-time charges of about $15 million to $20 million through the balance of 2009. The deal is also expected to dilute Thoratec's earnings into 2011.

The company said about 50 percent of the deal consideration will be paid in cash and about 50 percent in shares of Thoratec.

HeartWare's operations will be integrated into Thoratec's cardiovascular division, the companies said.

Thoratec was advised by Banc of America Securities LLC, while HeartWare's financial adviser was J.P. Morgan.

Thoratec shares, which have lost about 7 percent of their value over the last one month before Friday's announcement, were trading up 47 cents at $26.84 on Nasdaq. HeartWare shares closed at A$0.665 on Feb. 12 on the Australian stock exchange. (Additional reporting by Esha Dey; Editing by Jarshad Kakkrakandy, Pratish Narayanan)

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