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AGA Medical IPO set; it's a first for Minn. in 23 months
Company cuts expectations for stock's opening price. Trading may start as soon as today in the $15-$16 range.
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AGA Medical's pending stock sale will price lower than expected and may begin trading as early as today in what is expected to be the first initial public offering by a Minnesota company in nearly two years.
On Tuesday, AGA said in a Securities and Exchange Commission filing that it and selling shareholders expect to sell 13.8 million shares at a price of $15 to $16 per share, lower than the $19 to $21 price anticipated in an SEC registration statement filed two weeks ago.
The Plymouth-based company makes devices used to repair structural heart defects and treat vascular diseases, mostly in children. The company, founded in 1995 by retired University of Minnesota researcher Dr. Kurt Amplatz, also is investing in next-generation applications that will address larger market opportunities to reduce the incidence of strokes, aneurysms and migraine headaches with "Amplatzer" occlusion devices.
Analyst Paul Bard of Greenwich, Conn.-based Renaissance Capital told the Associated Press that investors may be reluctant to pay what they perceive as a premium until AGA Medical has concluded related tests and gotten approval for expanded usage from the U.S. Food and Drug Administration.
"Commercial launch is still far off," Bard said. "... Investors are wary of paying up for that kind of uncertainty. That is especially true in a weak market for IPOs."
Studies have linked "patent foramen ovale," commonly known as a hole in the heart, to stroke as well as migraine. AGA Medical also is working on a vascular graft to treat aneurysms, and hopes to market another Amplatzer product to reduce strokes in patients with irregular heartbeats.
'Highly profitable'
Bard said the core business is "highly profitable" but probably fairly valued at $15 to $16 per share.
AGA Medical earned $9.1 million in 2008 on sales of $167 million, according to the SEC filing. However, the company swung to a $4.2 million loss in the six-month period ended June 30, compared with a $2.35 million profit during the first half of 2008, as it increased product-development spending.
The IPO includes nearly 7 million shares for sale by the company and 6.8 million shares controlled by former CEO Frank Gougeon, who also is a board member. On Tuesday, AGA Medical reduced the number of shares it will sell and increased the number Gougeon will sell to achieve the same number of 13.8 million shares cited in the earlier registration statement.
Participating investment banks have an option to buy another 2.1 million shares.
The company said it would raise $126.2 million after deducting expenses if its shares and all options are exercised at $15.50 per share, the midpoint.
That does not include the funds raised by Gougeon. AGA expects to use the proceeds to pay down debt and increase working capital.
The 23 months since a Minnesota firm went public is the longest period since Buffalo Wild Wings ended a 19-month drought with an IPO in November 2003.
Staff writer Patrick Kennedy contributed to this report. Neal St. Anthony • 612-673-7144
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