Sep 03, 2015 06:00 AM EDT

HeartWare Shares Tumble After Valtech Cardio Purchase But Analysts See ‘Strategic’ $7 Billion Market


HeartWare's move to purchase Valtech Cardio is not disappointing news after all. Analysts have shared that the company could actually be making more since the purchase has opened its doors to a $7 billion market.

HeartWare International's shares took a dive by 24 percent Tuesday, hitting $61.85 from its previous $81.81 price. The tumble was seen to be caused by the company's imminent purchase of Israel-based Valtech Cardio, according to The Street.

The mostly stock deal between HeartWare and Valtech Cardio is expected to be worth $860 million, with an upfront payment worth $4.4 million of HeartWare shares.

The Or Yehuda-based company's technology treats mitral valve regurgitation, tricuspid valve regurgitation and common mitral heart valve conditions. And it is for this reason that Leerink equity analysts Danielle Antalffy and Puneet Souda see a "highly strategic" move for HeartWare as it could be setting its sights on the $7 billion worth tricuspid valve repair and replacement market, noted Press Examiner.

This is not the first time that HeartWare expressed its intention of acquiring Valtech Cardio. HeartWare CEO and President Douglas Godshall said in a conference Tuesday that his company has already invested in the heart valve replacement device company in 2013.

Godshall noted that HeartWare did evaluate a large number of companies, but in the end "all roads led back to Valtech."

The Framingham, Massachusetts-based company's CEO also said that the mitral and tricuspid technology of the private Israel-based company complements what his company offers.

HAARETZ has learned that the terms in the deal between HeartWare and Valtech Cardio includes the former providing $365 million stocks to Valtech stakeholders and give an additional of $65 million sticks when the latter gets the CE approval of Cardioband's sale in Europe.

Founded in 2006, Valtech Cardio specializies in surgical and transcatheter valve fix and replacement devices used in treating heart valve conditions.

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