St. Jude Medical Inc. is in talks to acquire Thoratec Corp., a maker of implants that aid failing hearts, according to people familiar with the situation.
While the two companies are in ongoing discussions, no final deal has been agreed and the negotiations may still fall apart, the people said, asking not to be identified discussing a private matter. Thoratec could also opt to seek a different buyer, one of the people said.
Shares of Pleasanton, California-based Thoratec rose 19 percent to $57.98, an all-time high, at 12:32 p.m. in New York, valuing the company at more than $3 billion. The shares have climbed more than 74 percent this year amid new product developments and speculation the company could be an acquisition target. St. Jude rose 0.4 percent, giving it a market capitalization of $22 billion.
Medical-device manufacturers are making acquisitions to get access to new technology as hospital customers push for lower prices on older products. Medtronic Plc, which competes with St. Paul, Minnesota-based St. Jude to sell cardiac devices, has made three small acquisitions since June and last year agreed to acquire Covidien Plc for more than $46 billion.
Buying Thoratec would bolster St. Jude’s push into new and faster-growing markets as sales stagnate for its established products.
A representative of St. Jude, which makes devices for heart diseases as well as neurological conditions and chronic pain, declined to comment. A spokeswoman for Thoratec didn’t return phone messages.
Shares of HeartWare International Inc., Thoratec’s chief competitor, also surged Tuesday, climbing 7.6 percent to $85.21.
Pumps by Thoratec and Framingham, Massachusetts-based HeartWare help patients in need of heart transplants survive until a donor organ is available. The devices are attached to the left ventricle, the heart’s main pumping chamber. A tube runs around the heart and connects to the aorta, which funnels oxygen-rich blood to the rest of the body. A small electric motor ensures the blood is continuously moving between the two.
Former U.S. Vice President Dick Cheney received a Thoratec HeartMate II implant in 2012.
Thoratec’s product sales dropped 5 percent last year to $477.6 million after reports of blood clots developing in patients, competition from HeartWare and limits on manufacturing capacity.
The company’s HeartMate II was tied to potentially fatal clots in patients relying on the device to pump blood for their failing hearts, according to a study published in 2013. Thoratec issued an urgent warning last year to patients who used a pocket controller when trying to change to a backup controlled from their main system after four patients died.
Still, the company began to slow the pace of total revenue declines and even to expand sales in the U.S. Thoratec is now developing its next-generation device, called the HeartMate III, with a U.S. study underway and European approval expected this year.