Medtronic, a healthcare products manufacturer based in Minneapolis, Minnesota, announced that it has purchased a 25% stake in LifeTech Scientific, a Chinese medical device maker, for $66.2 million. The partial acquisition will help Medtronic build a stake in China’s growing market for cardiovascular technologies.
According to a press release by Medtronic, the company first paid $46.5 million for a 19% interest in the Chinese company. After this, the company purchased an additional convertible note for $19.6 million, representing an additional 5% stake in the company (calculated on a postconversion basis). With the aggregate 25% stake (calculated on a postconversion basis), Medtronic will gain the right to sell the Chinese company’s products around the world.
In the past, Medtronic has emphasized the importance of strategic partnerships with Chinese companies. It has stated that it will not barge into the growing Chinese market on its own. With the partial acquisition of LifeTech, Medtronic will be able to ease itself into the market.
China is currently revamping its government healthcare system. As the existing population in China ages, the need for vascular and orthopedic products is expected to grow significantly. Since China’s government has highlighted the need for in-country research and development, many firms like Medtronic and J&J are making strategic acquisitions of Chinese medical device companies.
In its press release, Medtronic stated, “In collaborating with leading clinicians, researchers and scientists, Medtronic offers the broadest range of innovative medical technology for the interventional and surgical treatment of cardiovascular disease and cardiac arrhythmias. The company is continuing its commitment to offering products and services that deliver clinical and economic value to healthcare consumers and providers worldwide.”