eV3 Acquisition Broadens Neurovascular Product Portfolio

Jun.29.09 | About: ev3, Inc. (EVVV)

ev3 Inc. (EVVV) recently announced that it has completed the acquisition of Chestnut Medical Technologies, Inc. The deal was valued at $26 million in net cash and approximately 5.073 million shares of ev3, for a total of approximately $75 million.

An additional payment of up to $75 million is payable in cash and ev3 shares on receiving the U.S. FDA (Food and Drug Administration) approval of the Chestnut's Pipeline technology. The transaction is expected to be dilutive to ev3's GAAP EPS in 2009 and 2010, neutral in 2011, and accretive thereafter.

The Chestnut acquisition broadens EVVV's neurovascular product portfolio by adding the Pipeline device to EVVV's existing embolic product and access technologies.

Chestnut is a privately held, California-based company that focuses on developing minimally invasive therapies for interventional neuroradiology. Chestnut's Pipeline technology is a new class of cerebral embolization device that provides a complete and durable aneurysm embolization by diverting the blood flow away from an aneurysm. The device, at the same time, maintains patency of the parent vessel.

EVVV is a Plymouth, Minnesota-based endovascular company that concentrates on catheter-based, or endovascular, technologies for the minimally invasive treatment of vascular diseases and disorders. The company's acquired broad product portfolio is focused on applications in each of the three sub-markets of the endovascular device market (ev3): peripheral vascular, cardiovascular and neurovascular.

EVVV competes in the endovascular market with a number of large companies like Boston Scientific (NYSE:BSX), Medtronic (NYSE:MDT), C.R. Bard (BCR), Cordis etc. -- all of which have greater resources.

Given the competition, much of the company's recent growth has come from new product introductions. Therefore continued product development and marketing is important to the company's outlook.

EVVV is the second largest neurovascular company by sales in the world. Our recent report has a Hold rating for the company's stock.