UPDATE: Citigroup Reiterates Medtronic at Buy Following Kanghui Holdings Deal
Citigroup maintained its Buy rating on Medtronic (NYSE: MDT) as the company announced the acquisition of Kanghui Holdings (NYSE: KH), thus likely ending its current joint venture with Chinese firm Weigao.
Citigroup noted, "KH is expected to generate $65MM in annual sales in 2012 with growth in excess of 20%. Trauma is 60% of sales and spine is around 33%. The sales level is similar to MDT's current run rate of sales from the Weigao JV but has a higher trauma and lower recon mix. MDT has an option to acquire Weigao's 49% stake in the JV by May 2013 for a range of $450-725MM or the JV would expire in January 2014. Since MDT paid more for KH, we assume either the management fit and/or product mix are considered preferable."
Medtronic closed at $43.48 on Thursday.
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