July 10 (Bloomberg) -- Edwards Lifesciences Corp., the maker of a heart valve implanted without chest-splitting surgery, may be a ripe acquisition target for the world's two biggest device makers, potentially boosting shares 60 percent.

Johnson & Johnson of New Brunswick, New Jersey, and Medtronic Inc., based in Minneapolis, announced plans within four days of each other last month to enter the heart market Edwards leads. Edwards has said its $30,000 Sapien valve, sold in Europe, may win U.S. approval by 2011, five years before rivals could emerge.

That head start makes Irvine, California-based Edwards a buyout candidate, said Owen Fitzpatrick, head of equities for Deutsche Bank. Recent device-company deals, among them J&J's February 2007, purchase of Conor Medsystems Inc. at a 32 percent premium, suggest Edwards could fetch as much as $100 a share, 60 percent above yesterday's price, said Jan David Wald, a Stanford Group analyst in Boston.

``Given the length of time it takes to get approved, it just seems like it's more logical to go out and buy your way in,'' said Fitzpatrick, whose $25 billion portfolio included $49 million in Edwards shares on March 31. ``If they truly want to have the leading product out there, they would have to take a peek at Edwards.''

Edwards jumped $1.45, or 2.3 percent, to $64.07 in New York Stock Exchange composite trading at 4:02 p.m., its highest price since it was spun off from Baxter International Inc. in March 2000. The stock has climbed 29 percent since September, when Sapien went on sale in Europe.

J&J, the world's biggest medical device maker, rose 76 cents, or 1.2 percent, to $66.64 and Medtronic, the second- biggest, increased 42 cents to $53.12.

Target Price

Nine of 15 analysts surveyed by Bloomberg have an average target price of $59 for Edwards, or 6 percent less than the shares closed yesterday. Only four recommend buying.

Sapien, implanted via a slender tube threaded through an artery, replaces the aortic valve, the three-flapped spigot between the heart's main pumping chamber and the artery that carries blood to the body. When the valve fails, the heart struggles to continue pumping, causing pain, fainting and heart failure, according to the National Institutes of Health.

Sapien is a ``breakthrough product,'' said Eric Crigler, a Memphis portfolio manager whose Skyhawk Small Cap Fund owns $7 million in Edwards shares. He said a buyer would have to pay at least $75 a share, a 20 percent premium that would value Edwards at $4.1 billion.

Even Higher?

Sapien's sales potential and other device makers' sluggish growth could push Edwards' value even higher, said Grant Harshbarger, a managing director on the investment banking team of Caris & Co. in New York.

``There's a lot of upside'' to Edwards, he said. Its larger rivals ``have to be in a position to grow faster than they're growing right now.''

Worldwide sales from minimally invasive valves could reach $1.3 billion by 2015, according to a projection by Lawrence Biegelsen, a Wachovia Capital Markets analyst. Sapien's total sales will reach $691 million by 2012, Biegelsen estimated. That's when some analysts think Sapien could face its first U.S. competition.

J&J, which has acquired 19 businesses in the past five years, is the most likely suitor, said Michael Weinstein, a J.P. Morgan analyst in New York. Medtronic is the world's second- biggest maker of heart valves, after Edwards, and an acquisition might raise antitrust concerns, Weinstein said in a telephone interview.

`Wrong Horse'

J&J doesn't comment on possible acquisitions, said Campbell Rogers, chief technology officer for Cordis, the division that expressed interest in the heart valve market last month.

Medtronic isn't interested in Edwards's valve because doctors can't reposition an improper installation, said Daniel Beach, a Medtronic spokesman.

``We think they've backed the wrong horse,'' Beach said in a telephone interview June 30. ``We believe we're going to be able to leapfrog them, relatively quickly and relatively easily.''

Doctors have been replacing bad aortic valves for decades in surgery that requires them to stop the heart, cut out the damaged valve and sew in a replacement made from cow, pig or mechanical parts. About 30 percent of people with failed valves are too old or sick for that procedure.

Edward's system allows surgeons to wrap Sapien around a pencil-thin catheter and slide it through an artery or directly into the heart, starting at an incision in the leg or between the ribs. Once in place, doctors expand the valve with a balloon while the heart continues beating.

Hope and Life

Half the people with failed valves who are too frail for open-heart surgery die within two years, Michael Mussallem, Edwards' chief executive officer, said in a phone interview June 27. Sapien gives them hope and raises the possibility that all heart valve replacements may someday be done without open-heart surgery, he said.

Edwards is ``happy to be an independent company,'' Mussallem said. He wouldn't say whether potential buyers have approached Edwards.

The only company selling a similar heart valve is closely held CoreValve Inc., of Irvine, California, which also won European approval last year. In the U.S., CoreValve is at least two years behind Edwards, said Wald, who recommends buying Edwards shares.

``If J&J wants to get into this area, I think they'll acquire,'' Wald said in a telephone interview. ``CoreValve certainly isn't too big to digest, and Edwards isn't either.''

CoreValve is ``not for sale,'' said Chief Executive Officer Daniel Lemaitre, who was a Medtronic executive before joining CoreValve in April. ``If we keep our heads down and do what we want to do for patients, we're going to be a big company.''

To contact the reporter on this story: Alex Nussbaum in New York anussbaum1@bloomberg.net.

Last Updated: July 10, 2008 16:27 EDT