Medtronic purchased a 19% equity interest in LifeTech for about $46.6 million, adding to that a $19.6 million convertible note purchase, representing a total of a more than 26% stake in the Chinese firm.
The transaction should close in the next 60 to 90 days, pending approvals from regulators and shareholders, according to a press release.
"China is key to our global strategy as we continue to expand our geographic footprint and strive to meet the needs of local cardiovascular patients, and this agreement reaffirms our commitment to this important market," Medtronic executive vice president and cardiac & vascular group president Mike Coyle said in prepared remarks.
The move closely follows the company’s announcement just weeks ago that it would pay $816 million to acquire China Kanghui Holdings (NYSE:KH). Kanghui’s product portfolio includes devices for trauma, the spine, joint reconstruction that complement the Medtronic’s own suite of products, the company said.
That deal is expected to close "in the next few months," according to the release, and must still be approved by Kanghui’s shareholders.
China plays a feature role in many medical device companies’ emerging market strategies, especially for industry titan Medtronic. CEO Omar Ishrak has not been shy about his intentions for China, a medical device market that he Ishrak has predicted may outpace the U.S. by the end of the decade.
MDT said late last year that it was looking to increase its total workforce in China to 2,000 by 2016.
In August Medtronic VP Simon Li told the Chinese reporters that the world’s largest pure play medical device maker was looking to expand its portfolio in China through a series of mergers and acquisition deals, which will be the centerpiece of its strategy for the People’s Republic.
About 2 months into his tenure last summer, Ishrak made clear that his vision for Medtronic’s future including a concerted effort to build its business in Brazil, Russia, India and China. The Chinese medical device market could eclipse the American market by the end of the decade, he said.
"The biggest long-term opportunity will be to meet the needs of billions of people who have no access to healthcare at all," Ishrak wrote in an email to employees in August 2011. "The population in emerging markets is tenfold that of developed countries. These statistics are further compounded by the fact that U.S. market is essentially flat. Reaching the global middle class opens up opportunities to us beyond anything we’ve ever seen before."
MDT shares saw a modest decline of 0.1%, trading at $43.00 as of aout 1:00 p.m.
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