Following through on its long-held plans to pump up its presence in China, Medtronic ($MDT) is spending $66.2 million to acquire a stake in LifeTech Scientific, a Shenzhen-based maker of cardiovascular devices.
Under the deal, Medtronic puts up $46.6 million for a 19% equity interest in the Chinese company, followed by a $19.6 million convertible note for an additional 7.4% stake, the company said. The buy-in gives Medtronic the right to sell LifeTech products around the world and the opportunity to acquire further shares of the company depending on sales and developmental milestones.
LifeTech specializes in cardiovascular devices, with treatments for structural heart defects, peripheral and aortic vascular disease, and heart valve disease. For Medtronic, the company's diverse portfolio of on-the-market tech makes it an ideal partner, said Mike Coyle, president of Medtronic's vascular group.
"With core competencies in materials research and manufacturing and a demonstrated track record of being awarded important state research grants and tenders, this relationship with LifeTech provides an opportunity to accelerate Medtronic's access and competencies in China, so that together we may reach more patients," Coyle said in a statement.
Medtronic CEO Omar Ishrak has said that the company wants to derive 20% of its revenue from emerging markets by 2016, with a particular focus on China. The device giant has been bullish about making that a reality, acquiring a 15% stake in devicemaker Shandong Weigao in 2007 and unveiling a new Shanghai R&D shop in August. Last month, Medtronic made waves with its $816 million buyout of China Kanghui Holdings ($KH), makers of orthopedic devices.
- read Medtronic's statement