Medtronic to Pay $66.2M for Stake in China Med Tech Co.

Medtronic to Pay $66.2M for Stake in China Med Tech Co.

The company announced its intent to purchase a 26.4 percent stake in LifeTech Scientific Corporation—a move that comes about two weeks after it agreed to buy another China-based medical device maker.

Medtronic, Inc., announced Monday that it has agreed to buy a 26.4 percent stake in Shenzhen, China-based cardiovascular device maker LifeTech Scientific Corporation.
 
Medtronic will pay $66.2 million for LifeTech: $46.6 million to buy a 19 percent equity stake in the company and $19.6 million to buy a convertible note—a type of bond that can be converted into shares of common stock and that would add an additional 7.4 percent ownership interest.
 
Once the deal closes, Medtronic will have the right to distribute LifeTech products. The Fridley-based medical device giant will also be able to buy additional shares of the company should LifeTech achieve unspecified financial or developmental milestones.
 
The announcement comes about two weeks after Medtronic revealed plans to acquire another Chinese company—Changzhou-based China Kanghui Holdings, Inc., which makes orthopedic implants.
 
That purchase, which is expected to close in the next few months and for which Medtronic will pay $816 million, will be the biggest-ever overseas acquisition for the company and will give it access to thousands of Chinese hospitals, according to a Bloomberg report. Medtronic CEO Omar Ishrak reportedly plans to expand Medtronic in fast-growing emerging markets, including China and India, with a goal to increase sales from those markets to 20 percent of companywide sales by 2016. (Sales from those markets accounted for less than 10 percent of companywide sales during the most recent fiscal year.)
 
Shenzhen-based LifeTech is a public company whose shares trade on the Hong Kong Stock Exchange and whose 2011 revenue amounted to roughly $22.4 million. The company makes minimally invasive devices for cardiovascular and peripheral vascular diseases. It employs about 412.
 
“China is key to our global strategy as we continue to expand our geographic footprint and strive to meet the needs of local cardiovascular patients, and this agreement reaffirms our commitment to this important market,” Mike Coyle, executive vice president and president of Medtronic’s cardiac and vascular business group, said in a statement.
 
The deal, which is pending approval from LifeTech’s shareholders and regulators in both China and Hong Kong, is expected to close within the next 60 to 90 days, Medtronic said.
 
Medtronic is Minnesota’s seventh-largest public company based on revenue, which totaled $16.2 billion for the fiscal year that ended in April.