EP Medsystems (MM) (NASDAQ:EPMD)
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St. Jude Medical, Inc. (NYSE: STJ) and EP MedSystems, Inc. (NASDAQ:
EPMD) announced today that the Boards of Directors of both companies
have unanimously approved a definitive merger agreement under which St.
Jude Medical will acquire EP MedSystems for approximately $92.1 million.
Terms of the Agreement
Under the terms of the merger agreement, EP MedSystems shareholders will
receive $3.00 of consideration for each EP MedSystems share they own,
with the option of receiving that amount in cash or St. Jude Medical
common stock. The number of shares of St. Jude Medical common stock that
EP MedSystems shareholders will receive will be determined based on the
average closing price over 10 trading days, ending on the second
business day before the transaction closes. The cash and stock elections
are subject to pro-ration such that St. Jude Medical will issue 40
percent of the total merger consideration in St. Jude Medical common
stock and 60 percent in cash.
In connection with this transaction, St. Jude Medical’s
Board of Directors has approved an additional stock buyback
authorization of $50 million, which increases St. Jude Medical’s
share repurchase authorization from $250 million to $300 million. The
additional buyback authorization will be used to offset the shares
issued in this transaction.
The companies anticipate this acquisition will close during the third
quarter of 2008. In connection with this transaction, St. Jude Medical
will record a special charge for in-process R&D. This acquisition does
not change St. Jude Medical’s existing
guidance for 2008 earnings per share, exclusive of the special charge.
Acceleration of St. Jude Medical’s AF
Program
Upon completion, this transaction will immediately add two new growth
drivers to St. Jude Medical’s program for
products used in atrial fibrillation (AF) and other electrophysiology
(EP) catheterization procedures. This includes the EP-WorkMate®
computerized electrophysiology workstation with a fully integrated EP-4™
Computerized Cardiac Stimulator and expansion options to incorporate the
NurseMate™ Remote Review Charting Station.
The EP-WorkMate® platform already enjoys a
strong number two share of the global market for EP recording systems in
spite of limited sales and marketing resources.
This transaction will also expedite St. Jude Medical’s
entry into the high-growth intracardiac ultrasound echocardiography
(ICE) market with the EP MedSystems ViewMate®
II intracardiac ultrasound system and the next generation ViewFlex™
PLUS ICE catheter scheduled for market release this quarter. This market
is growing at an estimated 25 percent to 30 percent per year and
includes both electrophysiology and interventional cardiology
applications.
“This transaction will accelerate the growth
of St. Jude Medical’s program to help
physicians cure atrial fibrillation,” said
Daniel J. Starks, chairman, president and chief executive officer of St.
Jude Medical. “EP MedSystems’
new ClearWave™ signal recording technology
and its next generation ViewFlex™ PLUS ICE
catheter will be especially important additions to our AF technology
platform.”
David Bruce, president and chief executive officer of EP MedSystems,
said, “With growth accelerating over the past
year, EP MedSystems’ products and market
position are stronger than they’ve ever been
thanks to the focus and efforts of our employees. This transaction
delivers significant shareholder value and enables our key product
platforms to benefit from the extensive worldwide distribution, customer
support and product development infrastructure of St. Jude Medical. We
look forward to working with the St. Jude Medical team toward a seamless
combination.”
The transaction is subject to certain closing conditions and regulatory
approvals, and approval by EP MedSystems shareholders. Following the
close of the transaction, Bruce is expected to join St. Jude Medical,
and EP MedSystems will become part of the Atrial Fibrillation division
of St. Jude Medical.
In connection with the transaction, Gibson, Dunn & Crutcher, LLP is
serving as legal counsel for St. Jude Medical. Piper Jaffray & Co. is
acting as financial advisor to EP MedSystems, and Morgan, Lewis &
Bockius LLP is serving as legal counsel for EP MedSystems.
Earnings Webcast Information
As previously announced, St. Jude Medical will hold a webcast to discuss
its first quarter 2008 financial results on Wednesday, April 16, 2008,
at 8:00 a.m. CDT. St. Jude Medical will also discuss this transaction at
that time. The webcast can be accessed at www.sjm.com
About EP MedSystems
EP MedSystems develops, manufactures and markets a line of products for
use in the cardiac rhythm management or electrophysiology market which
are used for visualization, diagnosis and treatment of cardiac rhythm
disorders. EP MedSystems’ EP product line
includes the EP-WorkMate® computerized
electrophysiology workstation, with expansion options to incorporate the
NurseMate™ Remote Review Charting Station,
and the EP-4™ Computerized Cardiac
Stimulator. In addition, EP MedSystems’
intracardiac echo (ultrasound or ICE) ultrasound catheter system,
including its ViewFlex® intracardiac imaging
catheters and ViewMate® II ultrasound imaging
system, is used for live visualization of devices and anatomy during
catheter based procedures in EP and interventional cardiology. Full year
2007 net sales for EP MedSystems were approximately $19 million. For
more information, visit EP MedSystems’
website at www.EPMedSystems.com
About St. Jude Medical
St. Jude Medical is dedicated to making life better for cardiac,
neurological and chronic pain patients worldwide through excellence in
medical device technology and services. St. Jude Medical has five major
focus areas that include: cardiac rhythm management, atrial
fibrillation, cardiac surgery, cardiology and neuromodulation.
Headquartered in St. Paul, Minn., St. Jude Medical employs approximately
12,000 people worldwide. For more information, please visit www.sjm.com.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 that involve
risks and uncertainties. Such forward-looking statements include
statements regarding the timing of the transaction and the consideration
to be received by the shareholders of EP MedSystems, the successful
integration of the EP MedSystems business into St. Jude Medical, the
expansion of St. Jude Medical’s product
offering, St. Jude Medical’s presence in the
ICE market, the enhancement of value and benefits to physician customers
and to St. Jude Medical’s and EP MedSystems’
shareholders, and the ability to realize growth and efficiencies as a
result of the transaction. The statements made in this press release are
based upon current expectations and are subject to certain risks and
uncertainties that could cause actual results to differ materially from
those described in the forward-looking statements. Such statements
involve potential risks and uncertainties, such as whether the merger
will be approved by the shareholders of EP MedSystems or by regulatory
authorities, whether each of the other conditions to closing set forth
in the merger agreement will be met, the ability of St. Jude Medical to
integrate EP MedSystems successfully, whether the transaction will
result in the enhancement of value and benefits to physician customers
and to St. Jude Medical’s and EP MedSystems’
shareholders, and the general effects of financial, economic, regulatory
and political conditions affecting the medical device development,
manufacture, sales and service industries. Neither St. Jude Medical nor
EP MedSystems intends to update these statements or undertakes any duty
to any person to provide any such update under any circumstance.
Additional Information
This announcement is neither an offer to purchase, nor a solicitation of
an offer to sell, shares of EP MedSystems, nor is it an offer to sell,
or a solicitation of an offer to purchase, shares of St. Jude Medical.
St. Jude Medical and EP MedSystems will be filing a registration
statement/joint proxy statement with respect to the merger and the
merger consideration with the Securities and Exchange Commission (SEC).
EP MedSystems shareholders are advised to read the registration
statement/joint proxy statement when it is made available to them,
because it will contain important information that should be read
carefully before any decision is made with respect to the merger. The
registration statement/joint proxy statement will be made available to
all shareholders of EP MedSystems at no expense to them, and will also
be available at no charge on the SEC's web site at www.sec.gov.
Shareholders may also obtain copies of the registration statement/joint
proxy statement without charge by requesting them from EP MedSystems in
writing at 575 Route 73 North, Building D, West Berlin, NJ, 08091, or by
phone at (856) 753-8533. St. Jude Medical and EP MedSystems and their
respective officers and directors may be deemed participants in the
solicitation of proxies from their stockholders with respect to the
transactions contemplated by the proposed merger. A description of any
interests of the executive officers and directors of EP MedSystems in
the proposed merger will be set forth in the proxy statement/prospectus.