Medtronic Does Some 'Light' Acquisition Housekeeping

By Chris Newmarker and Anastasia Thrift

Medtech giant Medtronic is completing some smaller acquisition deals--"smaller" as in only hundreds of millions of dollars--as it continues its quest to close on its $43 billion acquisition of Covidien.The Fridley, MN-based company said Wednesday that it had closed on its purchase of the remainder of Italian hospital services company NGC Medical S.p.A., in a deal that values the company at $350 million. The deal comes on the heels of Medtronic acquiring Sapiens Steering Brain Solution, an Eindhoven, Netherlands-based deep brain stimulation technique company, for $200 million.Medtronic already had a 30% ownership stake in NGC, which manages cardiovascular suites, operating rooms and intensive care units at nearly 30 hospitals across Italy. NGC is rapidly expanding its service offerings throughout Europe, the Middle East and Africa. It will serve as the managed services arm for Medtronic's Hospital Solutions business."As we are all acutely aware, current models of delivering healthcare are not sustainable, and Medtronic is intent on finding new ways to partner with physicians, hospital systems, patients, payers and governments around the world to meet their cost and access challenges and to deliver high quality healthcare," Rob ten Hoedt, executive vice president and president of Medtronic's EMEAC region, said in a news release.Meanwhile, the Sapiens acquisition aligns with Medtronic's expansion in the world of neurostimulators. The company recently released an update to its Activa neurostimulator to take it beyond a device simply for therapy to one that records brain activity information, too. Such data could lead to creating personalized DBS therapy, akin to the manner in which collected pacemaker information has shaped that device's design.Sapiens creates tools to more precisely treat degenerative or functional brain disorders--such as Parkinson's disease, dystonia, and others--by targeting electric shock to necessary areas. By finely tuning this therapy, patients might require a reduced amount of treatment sessions and experience fewer side effects.Eindhoven operations will continue with the staff on hand. Medtronic plans to use the site as an R&D center for neuromodulation technology in the future, adding to its existing R&D operations.The NGC and Sapiens buys come as Medtronic seeks to close on its unpopular merger with Covidien (Dublin, Ireland). The plan has drawn criticism from President Obama and other U.S. politicians, as well as Medtronic's own longtime shareholders. The massive merger would see Medtronic's headquarters move from Minnesota to Ireland, allowing the company to avoid paying billions of dollars in U.S. taxes. Some shareholders will be stuck with a capital gains tax when they exchange their current stock--ripe with years of investment--for stock in the new Ireland-based Medtronic plc.The merger came with a $43 billion price tag. Company officials say the tax inversion move, one increasingly taken by U.S. corporations, will free up funds to invest stateside and create medtech jobs. Covidien has been engaging in its own acquisition housekeeping as it awaits the Medtronic medtronic. It recently purchased privately-held Reverse Medical Corp. (Irvine, CA), adding the company's acute stroke management device lines and incorporating the neurovascular line into Covidien's own.

Anastasia Thrift is a contributor to Qmed and MPMN.

Chris Newmarker is senior editor of MPMN and Qmed. Follow him on Twitter at @newmarker.

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