Medtronic to Buy Privately Held Twelve Inc. -- 2nd Update
August 25 2015 - 6:36PM
Dow Jones News
By Jeanne Whalen
Medtronic PLC's $458 million acquisition of California startup
Twelve Inc. is the latest example of how the company is taking
advantage of the tax benefits it gained after reincorporating
overseas earlier this year.
Medtronic moved its headquarters to Dublin from Minneapolis
after acquiring Dublin-based Covidien PLC for $43 billion. That
move allowed the medical-device maker to spend more of its overseas
cash in the U.S. without having to pay U.S. tax on it--a perk Chief
Executive Omar Ishrak has said Medtronic would use to help it
acquire U.S. technology.
The U.S. Treasury has criticized companies for trying to "avoid
U.S. taxes" through such so-called "tax inversions," and tried to
discourage them by closing legal loopholes.
Twelve Inc., a privately held firm based in Redwood City,
Calif., is developing a device aimed at repairing faulty mitral
valves in the heart, which can contribute to congestive heart
failure. The device hasn't yet reached the market. Medtronic agreed
to pay $408 million upfront and another $50 million upon the
device's regulatory clearance in Europe. Twelve's investors include
the venture-capital firms Domain Associates, Versant Ventures and
Morgenthaler Ventures.
Medtronic rivals Edwards Lifesciences Corp. and Abbott
Laboratories have also recently acquired startups developing
heart-valve technology similar to Twelve's, Wells Fargo said in a
research note.
In June, Medtronic acquired Aptus Endosystems Inc. of Sunnyvale,
Calif., for roughly $110 million. It also bought Cleveland-based
CardioInsight Technologies Inc. in a deal valued at $93 million.
Last month, the company agreed to acquire RF Surgical Systems Inc.
of Carlsbad, Calif., for about $235 million.
Twelve is the second firm Medtronic has bought in recent years
that was originally established by The Foundry, a business
incubator in Menlo Park, Calif. In 2010, Medtronic acquired Ardian
Inc., another Foundry startup, for $800 million upfront plus
milestone payments. Both Twelve and Ardian were run by Chief
Executive Andrew Cleeland, vice chairman of The Foundry.
Mr. Cleeland and The Foundry didn't immediately respond to
requests for comment.
The Ardian acquisition so far has failed to pan out. Medtronic
last year was forced to take a $236 million pretax write-down on
Ardian assets, after the startup's experimental hypertension
treatment failed to perform adequately in a large clinical trial.
Medtronic has begun two new clinical trials of the technology and
says it still views Ardian as a "strong strategic acquisition."
Ezequiel Minaya contributed to this article.
Write to Jeanne Whalen at jeanne.whalen@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 25, 2015 18:21 ET (22:21 GMT)
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