Abbott (NYSE: ABT) is making an important play to expand its cardiovascular device portfolio, announcing that it plans to acquire Cardiovascular Systems (Nasdaq: CSII).
The two companies’ agreement, announced after market close yesterday, would provide $20 per common share for Cardiovascular Systems stockholders. The total expected equity value of the deal would be roughly $890 million.
By the next morning, CSII shares were up more than 48% to $19.78 apiece. ABT shares were down slightly to $110.10 apiece. MassDevice‘s MedTech 100 Index, which includes stocks of the world’s largest medical device companies, was up more than 12%.
Medtech is on a hot M&A streak this week. On top of the Abbott-CSI deal, Globus Medical and NuVasive have announced plans to merge. Plus. GE HealthCare plans to acquire Caption Health and its AI-powered image guidance tech.
CSI and Abbott’s boards have approved the merger. It’s subject to the approval of CSI stockholders and customary closing conditions, including applicable regulatory approvals.
J.P. Morgan Securities is Cardiovascular Systems’ financial advisor in the transaction.
Why buying Cardiovascular Systems makes sense to Abbott
Abbott officials view the planned purchase as complementary to the company’s cardiovascular offerings. New Brighton, Minnesota–based Cardiovascular Systems’ portfolio includes the Diamondback 360 — a major system for atherectomy. Atherectomy is a minimally invasive procedure that cuts plaque from the walls of a blood vessel. Health providers use it in addition to or as an alternative to balloon angioplasty.
Meanwhile, Abbott is a major company in the angioplasty and stents space. The company noted that CSI’s atherectomy system prepares vessels for angioplasty or stenting to restore blood flow.
“The acquisition of CSI will add new, complementary technologies to Abbott’s leading vascular device offerings,” Lisa Earnhardt, Abbott’s EVP of Medical Devices, said in a news release. “CSI has a talented and experienced team and a leading atherectomy system that will allow Abbott to provide physicians more tools to help patients live fuller lives.”
Cardiovascular Systems CEO Scott Ward said Abbott shares CSI’s passion for innovative solutions to treat complex peripheral vascular disease and coronary artery disease. “We believe combining with Abbott delivers value to our patients, physician customers, employees and stockholders while continuing our work to save limbs and save lives every day.”
BTIG analysts were positive about the acquisition news, keeping their Buy rating on ABT shares.
Marie Thibault and Sam Eiber at BTIG described the deal as an inexpensive way for Abbott to tap into large, high-growth, adjacent market opportunities. They noted that CSI’s R&D pipeline includes mechanical thrombectomy, intravascular lithotripsy, drug-coated balloons, and mechanical circulatory support. “We think ABT’s size and scale may expedite development. With CSII trading at historically depressed valuation levels, we see this as a prudent purchase with a favorable risk/reward profile for ABT.”