(Bloomberg) — St. Jude Medical Inc. (NYSE:STJ) agreed to buy Thoratec Corp., a maker of implants that aid failing hearts, for $3.4 billion in cash.
The offer of $63.50 a share represents a 40 percent premium over Thoratec’s average trading price in the 30-day period that ended last week, the companies said Wednesday in a statement. The deal will add to St. Jude’s adjusted earnings beginning next year, the company said.
Medical-device manufacturers are making acquisitions to get access to new technology as hospital customers push for lower prices on older products. Medtronic P.L.C., which competes with St. Paul, Minnesota-based St. Jude to sell cardiac devices, has made three small purchases since June and last year agreed to acquire Covidien P.L.C. for more than $46 billion.
Buying Thoratec would bolster St. Jude’s push into new and faster-growing markets as sales stagnate for its established products.
The agreement allows Thoratec to seek other takeover offers through Aug. 20. If it finds a better deal by then, it must pay St. Jude a $30 million breakup fee.
Bloomberg reported Tuesday that the companies were nearing an agreement. Shares of Thoratec and its chief competitor, HeartWare International Inc., surged Tuesday on the report.
Pumps by Thoratec and Framingham, Massachusetts-based HeartWare help patients in need of heart transplants survive until a donor organ is available. The devices are attached to the left ventricle, the heart’s main pumping chamber. A tube runs around the heart and connects to the aorta, which funnels oxygen-rich blood to the rest of the body. A small electric motor ensures the blood is continuously moving between the two.