(Adds analyst rating and price target; updates share movement)
By Anand Basu
BANGALORE Feb 13 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
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
The company said about 50 percent of the deal consideration
will be paid in cash and about 50 percent in shares of
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)