A number of high-profile medical technology firms, including the likes of Boston Scientific (BSX), Abbott Laboratories (ABT) and Medtronic (MDT), are unlikely to stand in the way of Dutch firm Philips' bid for heart device-maker Spectranetics (SPNC), an analyst said Wednesday.
X On the stock market today, Spectranetics stock rocketed to a record closing high, up 26.2%, to 38.35, after Philips announced its plan to acquire Spectranetics for $38.50 in cash per share. The deal values Spectranetics at 1.9 billion euros, about $2.16 billion.
Needham analyst Mike Matson says the bidding will likely stop there as Boston Scientific, Abbott and Medtronic aren't expected to bid for the company. Spectranetics makes a drug-coated balloon called Stellarex as a treatment for a disease in which the arteries to the legs, stomach, arms and head narrow.
Rivals C.R. Bard (BCR), Boston Scientific and Medtronic already make drug-coated balloons, Matson wrote in a note to clients. Further, Becton Dickinson (BDX) is acquiring C.R. Bard for $24 billion.
That leaves three major firms in the sector that lack drug-coated balloons: Abbott, Cardinal Health (CAH) and Terumo.
"We suspect Abbott is too preoccupied with its St. Jude Medical and Alere (ALR) acquisitions to pursue another large deal," he said. "Similarly, Cardinal is in the process of acquiring Medtronic's medical supplies business for $6 billion."
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Matson is unsure of Terumo's acquisition strategy.
Similarly, he doesn't expect Philips' acquisition to get caught up with regulatory issues. Philips and Spectranetics only overlap in atherectomy, a process in which hardened or narrowed arteries are removed from the body. Philips got into the area with an earlier acquisition.
"But we believe its market share is very low and think regulatory issues are unlikely," he said.
Philips said Wednesday that it expects the deal to close in the third quarter. The Dutch firm expects to see revenue growth and profit accretion by 2018.
Matson kept his buy rating on Spectranetics stock, though he boosted his price target to 38.50 from 34 to reflect the acquisition cost.
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