» Subscribe Today!
More of what you want to know.
The Daily News
X

Forgot your password?
Skip Navigation LinksHome >
VOL. 127 | NO. 191 | Monday, October 01, 2012

Medtronic to Buy Chinese Company for $816 Million

AP

Print | Front Page | Email this story | Comments ()

MINNEAPOLIS (AP)Medtronic Inc. will buy China Kanghui Holdings for $816 million, helping it expand in one of the world’s fastest growing medical device markets.

Medtronic, the world’s largest maker of medical devices, is paying $30.75 for each share of Kanghui Holdings, a 22 percent premium to the stock’s closing price Thursday, Sept. 27. Net of Kangui’s cash, the transaction is valued at $755 million.

China Kanghui Holdings makes orthopedics devices, specializing in trauma, spine and joint reconstruction. The company earned net income of $18.9 million in 2011 as revenue rose 35 percent to 327 million yuan ($51.4 million). Medtronic said late Thursday the company has a large product portfolio; strong research and development and manufacturing operations; and a large distribution network.

The American depository shares of China Kanghui Holdings have traded between $12.92 and $27.47 in the last 12 months.

Mizuho Securities analyst Michael Matson said the purchase is consistent with Medtronic’s strategy of acquisitions in emerging markets.

In August the Minneapolis-based company announced the opening of an “Innovation Center” in Shanghai, its first one outside of the U.S. and Europe, to support research and development in China.

“While we think Medtronic is paying a high price, it may be justified by Kanghui Holdings’ strong revenue growth, high margins and the vast potential of the Chinese market,” he wrote.

Medtronic expects the transaction will be neutral to its net income in 2013 and 2014.

Matson said Medtronic sells about $100 million in medical devices through a joint venture with another Chinese company, and it’s not clear what will happen to that joint venture in the wake of this deal.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Sign-Up For Our Free Email Edition
Get the news first with our daily email


 
Blog Get more from The Daily News
Blog News, Training & Events
RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 54 266 12,031
MORTGAGES 111 406 15,756
FORECLOSURE NOTICES 18 98 3,121
BUILDING PERMITS 0 606 28,832
BANKRUPTCIES 73 364 11,671
BUSINESS LICENSES 17 119 4,274
UTILITY CONNECTIONS 121 549 17,732
MARRIAGE LICENSES 23 104 3,668

Weekly Edition

Issues | About

The Memphis News: Business, politics, and the public interest.