St. Jude Medical made itself an early Christmas present in the form of two acquisitions totaling $533 million.  St. Jude paid $250 million for Radi Medical AB of Sweden, a company with revenues of approximately $80 million in 2008 (up 19% Y/Y)and agreed to pay $283 million in installments and the assumption of a small amount of debt for Israeli based MediGuide, a developmental stage company.

Radi Medical Systems is the world leader in two segments of the market for cardiovascular medical devices in which St. Jude Medical does not currently participate.  Radi Medical Systems' pressure measurement guidewire, PressureWire Certus, comprises approximately a 70 percent share of the global market for physiological assessment of coronary lesions.  The market for physiological assessment of coronary lesions totaled over $60 million in 2008 and is projected to continue growing at a strong double-digit rate.

Radi’s other product line is comprised of two products used in manual compression assisted vascular closure and will compliment STJ’s active vascular closure device, Angio-Seal.  This market totaled approximately $45 million in 2008 and is projected to continue to grow at least at a mid single-digit rate. STJ estimates that the global vascular closure market is only 27% penetrated.

STJ expects Radi to be neutral to 2009 earnings and accretive in 2010.  Given the revenue base and the growth rates, we view this as a favorable acquisition for STJ.

The company also acquired MediGuide.  Terms of the transaction provide for St. Jude Medical to pay $138 million of the purchase price in December 2008, with the balance due in two subsequent payments of $111 million in November 2009 and up to $34 million in April 2010.  The Medical Positioning System (gMPS) is a navigation system that uses proprietary technology for real-time tracking of sub-millimeter sized sensor that can be mounted on guidewires, needles, catheter or other devices and viewed in 3-D on fluoroscope, CT, MRI or ultrasound.  The gMPS has been designed to eliminate motion artifacts caused by a patient’s heartbeats, respiration or other movement.  The system provides more information and reduces the risk of exposure to radiation.

St. Jude Medical will record a special charge of approximately $300 million for in-process research and development in the fourth quarter of 2008. This acquisition does not change St. Jude Medical's outlook for 2008 or 2009 consolidated earnings per share, exclusive of the special charge.  Since it is difficult to evaluate the potential size of the market for the gMPS system, it is difficult to determine if STJ paid a fair price for the technology.  Management believes it provides an important advantage in its atrial fibrillation business and that it might have other as yet undefined applications.  In our opinion, it appears promising and strategically important and probably a solid acquisition.