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Biotech / Medical : Medtronic (MDT) -- Ignore unavailable to you. Want to Upgrade?

To: treetopflier who wrote (361)	11/30/1998 5:26:00 PM
From: Chip Anderson	Read Replies (1) \| Respond to of 687

Here's the transcript of today's CNBC story on Medtronics' acquisitions: MARIA: MEDTRONIC CONTINUING ON THE EXPANSION TRAIL. THE MANUFACTURER OF PACEMAKERS AND OTHER MEDICAL DEVICES BUYING ARTERIAL VASCULAR ENGINEERING FOR $3.7 BILLION. THIS CREATES ONE OF THE WORLD'S LEADING CARDIOLOGY COMPANIES. IT'S THE FIFTH MAJOR TRANSACTION FOR MEDTRONIC SINCE JULY. STEVE FRANK JOINS US LIVE WITH MORE. THIS AN IS AN OBJECT LESSON TO DO RICH STOCK RICE TO DO A DEAL. STEVE: MEDTRONIC'S SHOPPING SPREE IS AN OBJECT LESSON IN USING A RICH CURRENCY TO DO DEALS. ITS PRICE TO EARNINGS MULTIPLE IS 40, ARTERIAL VASCULAR WAS TRADING AT 12, AND SO EVEN THOUGH MEDTRONIC IS PAYING 20 TIMES ARTERIAL VASCULAR'S 1999 EARNINGS, THE DEAL ISN'T DILUTIVE TO EARNINGS. NOW THE QUESTION IS, CAN MEDTRONIC HANDLE ALL THESE COMPANIES? >> FIVE ACQUISITIONS IN FIVE MONTHS, COULD THAT BE ENOUGH TO CAUSE PALPITATIONS AT THE COUNTRY'S LEADING MAKER OF CARDIAC PACEMAKERS? POSSIBLY BUT ANALYSTS THINK IN THE MEDICAL DEVICES AREA, MEDTRONIC'S HAND'S OFFICE MANAGEMENT STYLE MAY BE ITS BEST CHANG OF AAVOIDING POST MERGER HEART ACHE. >> THERE ARE NOT A LOT OF COST SYNERGIES NEAR TERM BUT YOU DON'T HAVE THE SAME LEVEL OF POST-MERGER INTEGRATION RISK. >> THE 8 BILLION DOLLAR BUYING BINGE BEGAN IN JUNE WHEN IT ACQUIRED PHYSIOCONTROL A. MAKER OF EXTERNAL DEFILL LATE TORES. THE ACQUISITION DESIGNED TO COMPLIMENT MEDTRONIC'S BUSINESS FOR PATIENTS WITH A HISTORY OF HARD PROBLEMS. JULY, A DEAL FOR AVECOR TO CIRCULATE AND OJTS AGAIN NATURE BLOOD. AND TWO DEALS OUTSIDE THE CARDIAC SECTOR, MIDAS REX AND SOPHOMORE DANEK, BIG DEVELOPER OF TOOLS FOR SPIBL AND CRANIAL SURGERIES. FINALLY, BACK TO THE HEART, WITH A DEAL TO ACQUIRE ARTERIAL VASCULAR ENGINEERING, A FAST-GROWING MAKER OF BALLOONS AND STENTS USED TO OPEN UP CLOGGED BLOOD VESSELS AND KEEP THEM OPEN. FOR MEDTRONIC WHICH FACES SLOWING GROWTH IN THE CORE PACEMAKER BUSINESS, THE FLUOR RIFF DAILS DEALINGS MAY BE JUST WHAT THE DRR ORDERED. >> THE LAST TWO YEARS, SOME OF THEIR PRODUCT PLATFORMS KIND OF REACHED MATURITY WHILE THEY WAITED FOR THE FDA TO APPROVE NEW PRODUCT PLATFORMS THEY WENT THROUGH IN SEVERAL QUARTERS OF SLOW GROWTH . I DON'T THINK THEY WANTED TO EXPERIENCE THAT AGAIN. >> MEDTRONIC TOLD ANALYST DESPITE THE PRICEY 3.7 BILLION DOLLARS IT'S PAYING FOR ARTERIAL VASCULAR, A STEEP 67% PREMIUM TO THE SMALLER COMPANY'S PRE-MERGER VALUE, THE DEAL WILL CONTRIBUTE BETWEEN TEN AND 12 CENTS TO EARNINGS NIX NEXT APRIL, ANOTHER 15, 16 THE FOLLOWING YEAR. IT EXPECTS TO REAP ADDITIONAL EARNINGS WHICH IT WILL REINVEST IN RESEARCH AND DEVELOPMENT THOUGH ANALYSTS CAUTION THAT PRICES IN THE HIGHLY COMPETITIVE CARDIAC STENT MARKET ARE LIKELY TO FALL TO EVERY NEXT YEAR. >> IT IS AN EXTREMELY PROFITABLE COMPANY WITH OPERATING MARGINS IN 45%. EVEN WITH SIGNIFICANT REDUCTIONS IN PRICING THIS, DEAL WOULD STILL BE ACCRETIVE FOR MEDTRONIC. >>> ANALYSTS SAY THEY EXPECT MEDTRONIC TO LAY LOW FOR A WHILE WHILE IT DIGESTS THESE DEALS. BUT I JUST GOT OFF THE PHONE WITH MEDTRONIC CEO BILL GEORGE, AND HE SAYS HE HAS NO INTENTION OF CALLING IT QUITS, AND CONTINUES TO BE HUNGRY FOR DEALS IN THE CARDIOVASCULAR AND NEUROSURGICAL SECTORS OF THE MEDICAL DEVICES MARKET. THOSE NEUROSURGEON CALL COMPANIES TENDS TO BE CHEAPER, 2, 300 DOLLAR RANGE. MARIA: STILL, THE DEAL MAKING CONTINUES, THANKS, STEVE FRANK WITH THE LATEST THERE. Chip coolhistory.com