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5 Game-Changing Megamergers (and 5 That Led to Controversy)

MD+DI takes a look at five deals that transformed companies for the better and five deals that resulted in controversy for the parties involved.

  • There have been quite a few megamergers in the medtech industry. Some acquisitions go off without a hitch, and others are a bit more complicated. MD+DI takes a look at five deals that were smooth and five others that became a bit problematic.

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  • Positive: Sorin/Cyberonics

    With any merger there is definitely going to be a shift in company culture. This shift can sometimes be perceived as one-sided, with the acquiring company not really changing much and the company being acquired changing completely. That’s just how the game goes sometimes. But the merger between Sorin and Cyberonics was a bit different. Billed as a merger of equals the two companies formed LivaNova – a company that specializes in cardiac surgery and neuromodulation. In Nov. of 2017, LivaNova narrowed its focus a bit and announded plans to divest its cardiac rhythm management business to MicroPort for $190 million in cash. In addition it doubled its focus on the transcatheter mitral valve replacement (TMVR) space.

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  • Controversial: Novartis/Transcend Medical

    Novartis sought two things through its 2016 acquisition of Transcend Medical. The first was to significantly boost Alcon – a company Novartis acquired in 2010 for $12.9 billion. The second was to get a significant entry point in micro invasive surgical market (MIGS). What happened instead was that the MIGS stent inherited from Transcend Medical had to be pulled off the market because long-term safety data showed at five years, patients with the device experienced statistically significant endothelial cell loss compared to those who underwent cataract surgery alone. And Novartis announced it was spinning out Alcon. (Editor's note: Technically this probably wouldn't be considered as a megamerger - but with the Inclusion of Alcon we're saying it makes the list.)

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  • Positivie: BD/CareFusion

    Sometimes Becton Dickinson & Co.’s $12.2 billion acquisition of CareFusion gets lost in the shuffle. At the time (2015), the merger between the two companies created what was said to be one of the 10th largest medical device companies in the world. The combined companies' complementary products would allow for medication preparation, administration and monitoring, and would extend the companies' markets.

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  • Controversial: Medtronic/Heartware

    If Dublin-based Medtronic was going to have any kind of success in the Left Ventricular Assist Device Market, it had to move quick on Heartware. The only other competitor in the LVAD market was Thoratec and it was acquired by St. Jude Medical, which was in the process of being acquired by Abbott Laboratories at the time (whew, that was a lot). However a month after Medtronic acquired the Framingham, MA-based company for $1.1 billion,FDA had designated two of its recalls as Class I. Medtronic seems to be back on track with the technology now and in July of 2018 it won FDA approval for a less-invasive implant approach of its HVAD System.

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  • Positive: Stryker/K2M

    The M&A scene was pretty busy last year. Boston Scientific kept the fires burning nearly averaging an acquisition a month. Not one to be left out of the mix, Stryker flexed its M&A prowess and announced its intention to pick up K2M specialist in complex spine and minimally invasive procedures, in a transaction worth $1.4 billion. Leesburg, VA-based K2M went public in 2014. The company is known for its Balance ACS platform of products, services, and research designed to help surgeons achieve three-dimensional spinal balance across the axial, coronal, and sagittal planes.

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  • Controversial: Abbott/Alere

    When Abbott Laboratories initially put up $6 billion to acquire Alere it looked like the perfect match. The Waltham, MA-based company had the ability to greatly increase Abbott’s point-of-care testing and diagnostic capabilities. But Abbott became lukewarm with the prospect of Alere when it was disclosed that a federal grand jury subpoena related to a U.S. Foreign Corrupt Practices Act investigation involving sales practices from 2013 to 2015 in Asia, Africa, and Latin America. Abbott even offered up to $50 million to walk away from the proposed merger, but Alere's board rejected the offer and approved the deal in October. Then the lawsuits started coming (yup we said lawsuits) – not to mention Abbott making a bid to acquire St. Jude Medical for $25 billion, while it was in the middle of the Alere acquisition (we’ll speak more on that later.) But that’s water under the bridge as both companies agreed to terms and the merger was completed in 2017. A year after the acquisition, MD+DI asked “was it worth all the fuss?

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  • Positive: Abbott/St. Jude Medical

    We did say we would get back to Abbott and St. Jude didn’t we? Of course we did. Abbott might have made its pitch to acquire St. Jude Medical for $25 billion at a contentious time – but it was deal that was certainly worth it, once again changing medtech. On top of that Abbott was now at a size that most companies could only envy. The company had so many achievements that it was named MD+DI Editor’s Choice for Company of the Year in 2017.

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  • Controversial: Zimmer/Biomet

    Zimmer was one of the first companies to kick off the mass consolidation spree that has occurred within the medtech industry over the last few years. The Warsaw, IN-based company made considerable noise when it announced it would acquire Biomet for $14 billion. The combination of both companies created an orthopedics powerhouse. While the deal looked good on paper – the company still hadn’t established a singular identity. In the combined company’s January 2018 call its newly appointed president and CEO Bryan Hanson addressed this very issue. During the January 2018 call, he said, the company just hasn't become a fully integrated new organization since the 2015 merger. "There are still camps of Zimmer and Biomet and we need to create Zimmer Biomet, forget the legacy companies," Hanson said. Since that meeting, Hanson has been successfully unifying the company and pushing it forward. 

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  • Positive: Medtronic/Covidien

    Medtronic and Covidien’s merger is perhaps the biggest boldest acquisition in medtech to date. Medtronic announced it would acquire Dublin-based Covidien back in 2014 for $43 billion. Yes, there was the whole tax inversion issue, which can be described as U.S. companies to move foreign earnings back into the country without paying U.S. corporate taxes, but in the scheme of things it’s such a small part of the deal. What is important is that the addition of Covidien not only expanded the medtech giant’s footprint and scale, but it also set the tone for all other mega-mergers to follow.

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  • Controversial: Boston Scientific/Guidant

    Where do we start with the Boston Scientific/Guidant merger. Numerous patient lawsuits; settlements with the IRS; even a lawsuit with Johnson & Johnson over a bid to acquire Guidant make the list of issues the Marlborough, MA-based company had resulting from the merger. At one point Boston Scientific disclosed it had set aside $381 million to deal with lawsuits regarding Guidant’s faulty heart devices. The list could go on. But the company eventually turned around making several big name acquisitions including Atritech, which gave it access to the Watchman device. The firm picked up about 10 companies in 2018. The comeback netted Boston Scientific MD+DI Editor’s Choice for Medtech Company of the Year in 2018.

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