Start-up advisor says ATS-Medtronic deal a good one

At least one medical-device industry expert believes the $370 million deal for Medtronic to acquire ATS Medical was a good move for both companies.

Pete Bianco advises start-ups and other firms in the medical device industry for Nilan Johnson Lewis in Minneapolis. He spoke with MPR News' Tom Crann about the deal.

Crann: Why is ATS a good acquisition for Medtronic? What does it add to Medtronic's product line?

Bianco: It rounds out their cardiac surgery portfolio, specifically in the area of ablation products, and augments their mechanical heart valve business as well.

Crann: Are these unique technologies out there to ATS?

Bianco: They are. There's several companies that do participate in the mechanical heart valves, but it's a very competitive business and they do have some unique tissue valves and other technologies that are really a good match for Medtronic's present product line.

Crann: Is this good for ATS?

Bianco: It sure is. This actually gives them a chance to accelerate their development and reach more patients and serve more patients and physicians than they probably could have done on their own.

Crann: And what about for the whole medical device industry. Is this good for the industry?

Bianco: This is a great local development in that Medtronic has acquired a very important company right in its own backyard. It's going to keep jobs that were grown in Minnesota in Minnesota, so this is a win-win for everybody involved. It really shows that the merger and acquisition environment is starting to come back again.

Crann: It hasn't been so rosy for the medical device industry, and there was a lot of concern about how health care reform would impact the industry. Minnesota's two senators and the industry were worried about the tax on medical device companies. How do things look now?

Bianco: I think it's still too early to tell, but at least we know what the boundaries are. The medical device industry as a whole is facing potentially unprecedented challenges in the future. It's not just health care reform, there's intellectual property reform, patent reform and how you protect your inventions ... as well as regulatory reform and the process by which the Food and Drug Administration reviews and approves new products. ... They're all coming under scrutiny and potentially being reformed over the next few years.

Crann: Are there other smaller cap companies like ATS out there that seem to be ripe for the picking by the bigger ones? Sometimes that's their aim, right?

Bianco: There are lots of them. That is their aim, and if you're going to start a new company that is your aim: to get acquired by Medtronic or somebody like that. ... The challenge over the last few years has been access to capital to allow you to grow to a point where you can be an attractive acquisition target.

Crann: You mention the shrinking of capital, but there has been a recent development in the state to get at that through the angel investor tax credit. What does that do?

Bianco: It incentivizes wealthy people in Minnesota to invest in early-stage companies as they're coming off of the research bench at the University of Minnesota or spinning out of a company like Medtronic, and allow those companies to access risk capital at a very critical time in their development, and give them a better chance to succeed than they normally would.

Crann: Do we know what the impact will be?

Bianco: It's too early to tell. This is something that will ramp up over the next few years. But based on what's happened in other states, I believe personally that this will have a significant impact.

(MPR reporter Elizabeth Dunbar contributed to this report.)