Medtronic to Acquire CryoCath Technologies Inc.
MINNEAPOLIS and MONTREAL – Medtronic, Inc. (NYSE: MDT) and CryoCath Technologies Inc. (TSX: CYT) today announced they have entered into an agreement whereby Medtronic, through a wholly owned subsidiary, will make a takeover bid for all of the outstanding shares of CryoCath for $8.75 Cdn per share in cash, representing a total equity value of approximately $400 million Cdn ($380 million USD).
The CryoCath board of directors has unanimously recommended that CryoCath shareholders accept the offer, and the acquisition is expected to close in the fourth quarter of calendar 2008.
“Medtronic estimates that up to five million patients worldwide are impacted by atrial fibrillation,” said Pat Mackin, president of the Cardiac Rhythm Disease Management business and senior vice president at Medtronic. “Medtronic and physicians are interested in procedures that are safer, faster and less complex so that more patients can benefit from treatment.”
“Medtronic’s offer reflects its endorsement of our cryoablation technology and the role that our flagship product, Arctic Front®, will play in treating atrial fibrillation patients around the world,” said Jan Keltjens, president and CEO of CryoCath. “This offer delivers significant value. Joining forces with Medtronic at this stage in our development will dramatically expand our reach and accelerate innovation to the benefit of patients today and tomorrow.”
The offer price represents a 97 percent premium to the closing price of the common shares of CryoCath on September 24, 2008, the last trading day prior to the announcement of the offer and a 93 percent premium to the volume weighted average trading price of the shares for the last 20 trading days.
The agreement was entered into following the completion of due diligence and negotiation during an exclusivity period and provides for, among other things, a non-solicitation covenant on the part of CryoCath, subject to “fiduciary out,” superior proposal and right-to-match provisions and the payment of a $13.6 million Cdn break-up fee in certain circumstances.
Medtronic’s offer to purchase is subject to the tender of at least 66 2/3 percent of CryoCath’s outstanding common shares on a fully diluted basis. The closing of the transaction is also subject to regulatory clearance and other customary conditions.
A take-over bid circular containing the terms of the offer and additional information regarding the offer, as well as a directors’ circular describing the background to the offer, will be mailed to CryoCath shareholders in the near future. Once mailed, these documents will also be available on the SEDAR website at www.sedar.com.
Asanté Partners is the financial advisor to the Board of Directors of CryoCath and legal counsel to CryoCath is Davies Ward Phillips & Vineberg LLP. Medtronic is being represented by Stikeman Elliott LLP.
CryoCath - www.cryocath.com - is a medical technology company that leads the world in cryotherapy products to treat cardiac arrhythmias. With annual sales in excess of $40 million Cdn, its products are routinely used in more than 500 centers around the world. The Company’s flagship product, Arctic Front, is a minimally invasive cryo-balloon catheter designed specifically to treat Atrial Fibrillation, an emerging $2 billion market opportunity. Marketed in Europe and the subject of a pivotal study in the United States, Arctic Front has been used to treat approximately 3,100 patients.
Medtronic, Inc. (www.medtronic.com), headquartered in Minneapolis, is the global leader in medical technology – alleviating pain, restoring health, and extending life for millions of people around the world.
Any forward-looking statements are subject to risks and uncertainties. Medtronic cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information. Forward looking statements include, but are not limited to, statements about the benefits of the acquisition, including future financial and operating results, post-acquisition plans, objectives, expectations and intentions and other statements that are not historical facts. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the ability to obtain regulatory approvals of the proposed acquisition, including antitrust approvals; the failure of CryoCath shareholders to deposit a sufficient number of shares; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the acquisition may not be fully realized or may take longer to realize than expected; disruption from the acquisition making it more difficult to maintain relationships with customers, employees or suppliers; and competition and its effect on pricing, spending, third-party relationships and revenues. Additional factors that may affect future results are contained in Medtronic’s Annual Report on Form 10-K for the year ended April 25, 2008. Actual results may differ materially from anticipated results. Medtronic disclaims any obligation to update and revise statements contained in this release based on new information or otherwise.
CryoCath Safe Harbor
This press release includes “forward-looking statements” that are subject to risks and uncertainties, including with respect to the timing of regulatory trials and their outcome. For information identifying legislative or regulatory, economic, climatic, currency, technological, competitive and other important factors that could cause actual results to differ materially from those anticipated in the forward looking statements, see CryoCath’s annual report available at www.sedar.com under the heading Risks and Uncertainties in the Management’s Discussion and Analysis section.
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