St. Jude Medical Inc. (NYSE:STJ) set the share exchange rate for its $1.3 billion half-cash, half-stock acquisition of AGA Medical Holdings Inc. (NSDQ:AGAM).
The St. Paul, Minn.-based medical device maker said it plans to provide AGA shareholders with 54 percent of a STJ share for every one AGAM share exchanged.
St. Jude’s $1.3 billion offer for AGA was a roughly 41 percent premium over AGAM’s Oct. 15 closing price of $14.71. The exchange offer represents a 46 percent premium above the Oct. 15 closing price as compared to STJ’s price of $39.90 for the same day.
AGA Medical shares closed at an average price of $20.80 since the merger deal was announced Oct. 18; STJ shares went for around $38.70 during that span. For the period, 54 percent of an STJ share would fetch about $20.90. STJ shares closed yesterday at $38.82, AGAM at 20.84. The companies’ share prices both edged down in mid-morning trading today, going for $38.50 and $20.80, respectively.
St. Jude said it calculated the exchange rate by dividing $20.80 by $38.54, which is the volume weighted average of the daily closing prices of STJ stock for the 10 trading days that ending Nov. 15, the second trading day prior to its planned expiration date for the exchange offer.
The acquisition deal stipulates that each AGAM shareholder receive $10.40 in cash and $10.40 worth of STJ stock. The agreement was based on AGAM’s average closing price during the 10 trading days ending two days before St. Jude began buying up AGAM shares on Oct. 20, according to St. Jude’s announcement of the merger.
Investors in AGA filed a lawsuit in the Delaware Chancery Court over St. Jude’s offer for AGA on Nov. 1, alleging that “the proposed transaction is the product of a flawed process that resulted from the board’s failure to maximize shareholder value and deprived AGA Medical’s public shareholders of the ability to participate in AGAM Medical’s long term prospects.”
The plaintiffs cited the fact that 65 percent of AGA Medical’s shares are already tied up in the deal (via tendering commitments from co-founder Franck Gougeon, who owns 20 percent of AGAM, and Welsh Carson Anderson & Stowe and its 45 percent stake).
“[T]he proposed transaction will go forward if St. Jude receives the tender of a least a majority of the company’s shares outstanding,” according to a press release from the plaintiffs. “In addition the plaintiff claims the proposed transaction is the result of an unfair process exacerbated by the unfair terms specified in the merger agreement,” including a $32.5 million termination fee.
St. Jude also today announced a development and marketing deal with ultrasound maker Zonare Medical Systems.
Under the agreement, the companies will combine St. Jude’s intracardiac echocardiography catheter and Zonare’s z.one Convertible Ultrasound system technology, which will result in a new, co-branded, ultrasound system for intracardiac imaging.
