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Edwards Lifesciences Corp 8-K Report, Unregistered Securities Sale (Nov 28, 2016)

Filed November 28, 2016For Securities:EW

Summary

Edwards Lifesciences Corp. (EW) announced on November 28, 2016, a significant strategic move with the entry into a Merger Agreement to acquire Valtech Cardio Ltd. for an aggregate purchase price of $340.0 million, with the potential for an additional $350.0 million in contingent consideration. This acquisition positions EW to enhance its portfolio in transcatheter repair of the mitral and tricuspid valves with Valtech's Cardioband system. The company also announced a new $1.0 billion share repurchase authorization, supplementing the existing $277.0 million under a prior program. This substantial buyback initiative signals confidence from management and provides flexibility to offset potential dilution from the acquisition, while continuing to return capital to shareholders.

Key Highlights

  • 1Edwards Lifesciences (EW) to acquire Valtech Cardio Ltd. for $340.0 million plus up to $350.0 million in contingent consideration.
  • 2Acquisition focuses on Valtech's Cardioband system for transcatheter repair of mitral and tricuspid valves.
  • 3Merger expected to close in the first quarter of 2017, subject to customary closing conditions.
  • 4EW will have an option to purchase Valtech's early-stage transseptal mitral valve replacement technology program (Mitraltech Program) for $200.0 million plus contingent consideration.
  • 5New $1.0 billion share repurchase program authorized, adding to the remaining $277.0 million of a previous program.
  • 6Share repurchases will be used to offset dilution from the Valtech transaction and support capital return strategies.

Frequently Asked Questions

The acquisition of Valtech Cardio Ltd. is strategic because it brings the Cardioband system, a technology for transcatheter repair of the mitral and tricuspid valves, into Edwards Lifesciences' portfolio. This is expected to strengthen EW's position in the structural heart disease market, particularly in valve repair solutions.

The aggregate purchase price of $340.0 million for Valtech will be funded through a combination of cash on hand and shares of Edwards Lifesciences' common stock. The exact proportion will be determined at closing according to the terms of the Merger Agreement.

The new $1.0 billion share repurchase authorization, along with the remaining $277.0 million from a previous program, provides Edwards Lifesciences with significant financial flexibility. The stated purposes are to offset potential dilution from issuing stock in the Valtech acquisition and to continue executing the company's share repurchase strategies, which aim to return capital to shareholders.

Valtech will spin off its early-stage transseptal mitral valve replacement technology (Mitraltech Program) before the merger closes. Edwards Lifesciences will have an option to acquire this program later for $200.0 million plus contingent consideration. This allows EW to potentially gain access to a next-generation mitral valve replacement technology while managing upfront investment and risk associated with its early stage.