Abbott on Wednesday agreed to buy Cardiovascular Systems for about $890 million in a transaction that will expand its portfolio of devices to treat peripheral and coronary artery disease.
CSI’s atherectomy devices sand away plaque buildup in arteries. The minimally invasive treatment prepares vessels for standard balloon angioplasty or stents to restore blood flow. St. Paul, Minn.-based CSI also has an early-stage pipeline of vascular intervention devices, Abbott said.
The deal should help boost Abbott’s competitive position in the vascular market, where growth has been lackluster, said RBC Capital Markets analyst Shagun Singh.
“The transaction makes sense, as it helps close product gaps in ABT’s vascular franchise,” Singh said in a note to clients.
The purchase also gives Abbott access to key pipeline products in kidney stone removal, drug-coated balloons, and mechanical circulatory support for high-risk coronary procedures, Singh said.
"The acquisition of CSI will add new, complementary technologies to Abbott's leading vascular device offerings," Lisa Earnhardt, Abbott’s executive vice president for medical devices, said in a statement. "CSI has a talented and experienced team and a leading atherectomy system that will allow Abbott to provide physicians more tools to help patient.”
BTIG analyst Marie Thibault wrote in a research note that other large cardiovascular device makers such as Boston Scientific and Medtronic have competing atherectomy systems, limiting the likelihood that another bidder will emerge for CSI. “We are not entirely surprised by the deal given ABT's large cash position, bolstered by the strong cash flow generated over the last two-plus years from its COVID-testing business,” Thibault wrote.
CSI saw its net loss in fiscal 2022 widen to $36.9 million, compared to the prior year, on a 9% decline in revenue to $236.2 million.
No timeline for completing the deal was provided. Under terms of the acquisition agreement, which has been approved by the boards of CSI and Abbott, CSI stockholders will receive $20 per share. The deal is expected to be neutral to Abbott's 2023 earnings outlook, the company said. The transaction still requires CSI stockholder and regulatory approvals.
Shares of CSI rose 49% to $19.78 in morning trading on Nasdaq. Abbott’s shares were little changed at $110.07 on the New York Stock Exchange.