Medtronic on Tuesday announced a new partnership with CathWorks, establishing the framework for a $585 million acquisition of the digital health company.
The structure of the partnership is unique, with Medtronic agreeing to invest up to $75 million in the Israel-based company while the company works to achieve certain milestones outlined by Medtronic.
Medtronic will then have the option, for five years, to buy CathWorks — an acquisition the companies estimate would top out at $585 million.
But, if Medtronic has not exercised its option by July 2027, CathWorks has "the right to compel Medtronic to acquire the company."
Under the news partnership, Medtronic will co-promote CathWorks' technology in the U.S., Europe and Japan where it is commercially available.
Medtronic spokesperson Lauren Mueller acknowledged the uncommon structure of the deal, but said that Medtronic has "confidence in the technology" and the deal offers "value-creating milestones."
Medtronic can't buy CathWorks until it meets these undisclosed milestones.
"The deal is structured with milestone-based call and put options rather than an acquisition upfront. This structure allows Medtronic to call the acquisition option first, aligns our interest with the current owners, and allows the technology to continue to be developed by the highly motivated team at CathWorks," Mueller said.
