St. Jude Medical to Acquire EP MedSystems

In a deal finalized this morning, St. Jude Medical will acquire EP MedSystems (EPMD) for $92.1 million in cash and stock. The deal values EPMD at $3.00 per share, a huge premium over yesterday’s closing price of $1.41.

In 2007, EPMD recorded record annual revenues of $18.9 million, an increase of 21% year-over-year.

EPMD’s EP-WorkMate is a fully integrated cardiac monitoring workstation. Despite the company’s limited sales and marketing infrastructure, EP-WorkMate dominates the sector and is number two in the global market.

EPMD’s ViewMate II is an ultrasound imaging console that incorporates ViewFlex, an intracardiac ultrasound catheter. According to St. Jude, the intracardiac ultrasound echocardiography market is growing 25 – 30% annually.

The acquisition will help strengthen St. Jude’s atrial fibrillation (AF) and electrophysiology (EP) catheterization product lines. Daniel J. Starks, President and CEO of St. Jude, commented “[EPMD’s] new ClearWave signal recording technology and its next generation ViewFlex PLUS ICE catheter will be especially important additions to our AF technology platform.”

ClearWave technology, incorporated into EPMD’s recording systems last month, significantly improves signal quality, an important differentiator.

The acquisition will close sometime during Q3 2008. In connection with this transaction, St. Jude’s Board of Directors has approved an additional stock buyback authorization of $50 million, to offset the shares issue in the transaction, which increases St. Jude’s share repurchase authorization from $250 million to $300 million.

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