St. Jude Eyeing Acquisitions

St. Jude Medical Inc. (STJ - Analyst Report) recently made a $15 million equity investment in Micell Technologies, a small company that operates in the niche market of developing drug-coated stents.

We view this as St. Jude’s strategy to acquire Micell in future and bolster its position in the cardiovascular segment. However, the investment does not give St. Jude a right to have a voting member in Micell’s board. Other details of the deal were not disclosed.

Micell’s drug-coated stents are less likely to produce blood clots than drug-eluting stents. A stent is a small metal tube used in surgeries to open up clogged arteries.

The equity investment provides Micell with a partner and funding source for exploring other applications in coating technology.

St. Jude Medical is a leading medical device manufacturer that designs, manufactures and distributes medical devices to treat cardiovascular and neurological conditions. The company operates through four business segments: Cardiac Rhythm Management (CRDM), Cardiovascular, Atrial Fibrillation, and Neuromodulation.

The company holds the second position in the market for ICDs and pacemakers in the CRDM segment after Medtronic Inc. (MDT - Analyst Report) but ahead of Boston Scientific Corp. (BSX - Analyst Report). St. Jude also follows market leader Medtronic in the neuromodulation space. Based on the company’s second-quarter results, we have assigned a Neutral rating to the stock.

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