St. Jude Medical Inc. is set to expand its portfolio of medical devices that aids heart failure.
In a press release, St. Jude has agreed to buy rival, Thoratec Corporation, for about $3.4 billion in cash.
The acquisition gives St. Jude access to new technology in the field of medical devices, particularly Thoratec's portfolio of devices that are used for mechanical circulatory support to treat patients suffering from advanced heart failure.
Daniel J. Starks, chairman, CEO and president of St. Jude Medical Inc., said in the press release that the acquisition "expands and enhances St. Jude Medical's established presence in heart failure therapies."
"Thoratec's strong core business and rich portfolio of new products complement St. Jude Medical's innovation-based growth strategy and will benefit patients, customers, employees and shareholders of both companies," he said.
One of Thoratec's devices is the HeartMate II LVAD, which stands for Left Ventricular Assist Device. It's a device that circulates blood throughout the body when the heart is too weak to pump blood on its own. It's a device that was implanted to former U.S. Vice President Dick Cheney in 2010 to save his life after suffering his fifth heart attack.
The move also allows St. Jude to stay competitive in a market where access to new technology is needed as patients are pushing for prices to be lowered on products that are already older.
Medtronic Plc, a rival of St Jude in selling medical devices for heart failures, already have three small acquisitions since June and last year acquired Covidien Plc, a health care products company and manufacturer of medical devices and supplies, according to Bloomberg.
St. Jude will be offering $63.50 per Thoratec share, which represents a 10 percent premium on the stock's Tuesday close price, according to a report from Reuters.
The deal, which is expected to close in the fourth quarter of this year, will add to St. Jude's 2016 per-share earnings and sales growth.
Thoratec is still allowed to solicit offers from other companies until Aug. 20.
If it finds a better offer within the "go-shop period", it is required to pay a breakup fee of about $30 million to St. Jude. If Thoratec terminates the agreement after the "go-shop period," it will pay about $111 million, according to the press release.
