St. Jude buys itself two presents

Not all the business news this Christmas season is dire. In the past three days, St. Jude Medical Inc. has spent more than a half-billion dollars plucking two small companies abroad from relative obscurity to bolster its product portfolio.

The Little Canada-based company said Monday it paid $283 million for an Israeli firm called MediGuide Inc., which has developed a navigation system that uses tiny sensors attached to needles, catheters and other medical devices to project 3D images for doctors performing minimally invasive surgical procedures.

St. Jude CEO Dan Starks said Monday that MediGuide's navigation technology stems from "30 years of intense development in Israel for jet-fighter applications." No surprise: MediGuide was spun out of a defense company in Israel seven years ago.

St. Jude will pay $138 million this month, with $111 million due in November and $34 million in April 2010.

On Sunday, St. Jude said it acquired Radi Medical Systems of Sweden for $250 million in cash. Radi markets a vascular closure device that is used to stem bleeding in the femoral artery, the entry point in artery-clearing angioplasty and stent procedures.

St. Jude already sells a product in that market called Angio-Seal, but sales have slowed lately. With the two products in house, St. Jude said it can attack a global market that is now only 27 percent penetrated.

"In that space, which is pretty well saturated, what you go after is market share," said Stanford Group analyst Jan Wald. "That's what it appears St. Jude is doing."

"It's a tiny market that has never taken off in the United States," said Tim Nelson, an analyst with FAF Advisors. Radi competes against a technology made by California-based Volcano Corp.

Given those two deals, it's doubtful that St. Jude will wade into the crowded drug-coated stent market, now controlled by four companies, including Fridley-based Medtronic Inc. and Boston Scientific Corp., which bases its cardiovascular business in Maple Grove.

"St. Jude will nibble around the edges in that market," said Nelson. "It would be really stupid for them to wade into the stent market."

St. Jude shares closed at $32.23, down 51 cents Monday.