Lake Region Medical, which got its start in the Twin Cities making Medtronic's pacemaker leads in the 1960s, has agreed to sell itself to a Texas firm in a $1.73 billion deal.
Texas-based Greatbatch, Inc. on Thursday said it would acquire Lake Region Medical in a cash-and-stock deal that will create a combined medical-device components manufacturer with 9,000 employees and sales on three continents.
If approved by regulators, Greatbatch will pay $478 million in cash plus 5.1 million shares of common stock, and also assume about $1 billion in Lake Region Medical debt. The companies estimate the combination will drive double-digit growth in earnings per share next year.
Both Greatbatch and Lake Region Medical are based in other states, but have significant manufacturing plants in Minnesota — in Plymouth and Minneapolis for Greatbatch and Chaska for Lake Region Medical. The impact on workers in those locations wasn't clear Thursday.
The companies had total revenue of $1.5 billion in 2014. As a combined entity, the companies will sell parts and manufacturing solutions to major medical device companies for cardiac-rhythm management, neuromodulation, and vascular, orthopedic and surgical therapies. In particular, Greatbatch in its announcement cited new access to the advanced surgical and interventional cardiology markets.
"I am very proud of the Lake Region Medical team and what they have accomplished over many years," Lake Region Medical CEO Donald Spence said in a news release. "I am confident the combination of Lake Region Medical and Greatbatch will form an even stronger entity with unmatched technology and manufacturing capabilities."
Starting out as a fishing-lure company in 1947, Lake Region Medical found success in the 1960s when the family-run operation figured out how to make tightly coiled wires for some of Medtronic's earliest pacemakers. Today it describes itself as helping the world's largest device companies "bring products from concept to point-of-care" in cardiology, vascular and surgical markets.
In March 2014, then-Chaska-based Lake Region Medical was acquired for $390 million by a large Massachusetts med-tech supplier called Accellent, which changed its brand name to Lake Region Medical shortly after the deal.
Accellent and Greatbatch both sell products to large devicemakers like Medtronic, Johnson & Johnson and St. Jude Medical.
Greatbatch and Lake Region Medical are projecting $25 million in operating profit from synergies between the two companies, but their joint news release didn't elaborate on whether that would come from cost-cutting, expanded sales or both.
Although now based in Frisco, Texas, Greatbatch has its own place in Minnesota med-tech history.
The company was founded by Wilson Greatbatch, who helped invent the first implantable pacemaker in 1961 and then licensed it to Minneapolis' Medtronic, whose own co-founder, Earl Bakken, had invented the first transistorized, wearable pacemaker four years earlier. Greatbatch went on to invent a lithium-iodine battery that greatly extended the life of pacemakers. Greatbatch, Inc. stock closed at $56.94 Thursday, up $7.05, or 14 percent.