St. Jude’s $20.80-per-share bid for its Twin Cities peer is a roughly 41 percent premium over AGA Medical’s Oct. 15 closing price of $14.71. Shares were trading at $20.75 in pre-market activity after news of the deal broke.
AGA makes devices designed to repair structural heart defects via transcatheter procedure. Last fall, it raised $199.4 million in a $14.50-pre-share IPO it had initially pegged as being worth $275 million.
The acquisition is a half cash, half stock split that will see each AGAM shareholder receive $10.40 in cash and $10.40 worth of STJ stock, based on its average closing price during the 10 trading days ending two days before the Oct. 20 offer closes. St. Jude will then look to buy all remaining shares of AGAM stock not exchanged during the offer before rolling the company into its cardiovascular division. AGA Medical president and CEO John Barr will join St. Jude and help run the company from its Plymouth, Minn., base.
Major stakeholders who together own at least 63 percent of AGA Medical, including co-founder Franck Gougeon and private equity firm Welsh Carson Anderson & Stowe, have already agreed to sell their shares, according to a press release. St. Jude said it will use cash on hand to fund the deal, which it doesn’t expect to have an impact on its 2010 earnings; its board OKed a $600 million stock repurchasing plan to offset the shares St. Jude will issue in the deal, expected to close this year.
St. Jude tapped BofA Merrill Lynch as financial advisor and Gibson, Dunn & Crutcher LLP as legal advisor on the deal; AGA Medical hired Piper Jaffray & Co. as financial advisor and Fredrikson & Byron P.A. as counsel.