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Analysts See No Sweeter Deal For Volcano

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Volcano Corporation (NASDAQ: VOLC) is unlikely to attract a sweeter deal than the one it agreed to Wednesday with Royal Philips, according to a couple of analysts.

Volcano, which makes surgical tools for angioplasty, inked a $1 billion deal with Philips that equals $18 a share and is slated to close in the first quarter.

Volcano had been under threat of a proxy fight by activist shareholder and 5.1 percent stakeholder Engaged Capital.

Antitrust hurdles would prove too high for big players in the cardiac imaging sector to step in with a higher bid, Credit Suisse's Bruce Nudell said Wednesday.

Other cardiology companies that lack similar offerings like Abbott Laboratories (NYSE: ABT) and Johnson & Johnson (NYSE: JNJ) appear uninterested in drug-coated stent markets that are linked with Volcano surgical tools, Nudell said.

With with Philips counting each of the top 50 U.S. heart surgery hospitals as current customers, the proposed merger is a good fit according to Nudell, who raised his target to $18 from $14, but downgraded Volcano to Neutral from Outperform.

Piper Jaffray analyst Brooks West similarly cut Volcano to Neutral from Overweight, and said a higher competing offer is unlikely.

Philips' bid represents three times Volcano's total market value, compared with 3.7 times market value for the recent average medical technology deal, according to Morgan Stanley analysts.

Latest Ratings for VOLC

DateFirmActionFromTo
Dec 2014Roth CapitalDowngradesBuyNeutral
Dec 2014Credit SuisseDowngradesOutperformNeutral
Dec 2014PiperJaffrayDowngradesOverweightNeutral

View More Analyst Ratings for VOLC
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