Thoratec, a provider of device-based mechanical circulatory support therapies to save, support and restore failing hearts, has signed a definitive agreement to sell its International Technidyne Corp (ITC) division to Danaher Corp ( DHR).
The terms of the transaction call for an initial payment to Thoratec of $110m in cash upon closing. In addition, the agreement includes an earn-out based on annual gross profit levels achieved by the division’s Alternate Site business. Based on Thoratec’s current expectations, the value of the earn-out would total $26m and be paid over a three year period beginning in 2010.
Thoratec said that beginning in the second quarter of 2010, the ITC division will be accounted for as a discontinued operation in company’s GAAP and non-GAAP income statements. Thoratec will provide additional details regarding the financial impact of the transaction when it reports its first quarter 2010 results.
Gary Burbach, president and chief executive officer of Thoratec, said: “We believe that this transaction is a positive development for all parties involved, as it captures what we view as a fair value for the ITC division and enables Thoratec to focus our attention and resources on our fast-growing VAD business.
“HeartMate II has enjoyed strong commercial adoption in the bridge-to-transplantation indication, and given our recently announced Destination Therapy (DT) data and approval, we are excited to extend this therapy to a broader patient population in the years to come. At the same time, given Danaher’s strong presence in the diagnostics market, we believe ITC will be able to build upon its industry-leading position.”
David Smith, executive vice president and chief financial officer of Thoratec, said: “The cash generated by this transaction will enhance our already strong balance sheet and facilitate our investments in the HeartMate II DT launch, our broad pipeline of products for mechanical circulatory support, and future business development initiatives.
“The earn-out will enable us to benefit from our investments in ITC over the past several years, including the extensive development program for the new ProTime InRhythm device, which is expected to be introduced during 2010.”
The transaction is subject to customary closing conditions, including the receipt of required antitrust approvals. Thoratec currently expects the transaction to close in the second quarter of 2010.
Headquartered in Pleasanton, California, Thoratec’s product lines include the Thoratec VAD and HeartMate LVAS (Left Ventricular Assist System). Additionally, its (ITC) division is a provider in point-of care blood testing and skin incision products.