Medtronic Looking for Acquisitions Abroad, CEO Ishrak Says
January 11, 2012, 4:15 AM ESTBy Michelle Fay Cortez
(Updates with company comment in third paragraph.)
Jan. 9 (Bloomberg) -- Medtronic Inc., the world’s largest maker of heart-rhythm devices, is looking for acquisitions abroad and has about $2 billion a year to spend, Chief Executive Officer Omar Ishrak said.
Medtronic generates about $4 billion annually in free cash, and uses about half of it for dividends and to buy back shares, Ishrak said today at the J.P. Morgan Healthcare Conference in San Francisco. The remaining money is available for acquisitions, provided the right targets are found, he said.
The Minneapolis-based company will only consider purchases that trigger little or no reduction in earnings per share, according to Ishrak. Any acquisition erodes profit would be accompanied by cost-cutting to reduce the damage, he said.
“We need to have a far more disciplined approach to acquisitions,” said Ishrak, who is targeting purchases in growth markets where the company can take a leadership position. “That may be tough, but we’ll have to find a way to do it. It’s going to be a big hurdle to get any form of dilution from us.”
Since most of Medtronic’s cash is earned outside the U.S., the company may shift expenses abroad or repatriate foreign profits, he said. “We’ll by nature have to target non-U.S. acquisitions simply from where our cash is,” Ishrak said.
If the company’s efforts to find investments and acquisitions fail to turn up anything that fits the requirements, it may return more cash back to shareholders, he said.
--Editors: Reg Gale, Chris Staiti
To contact the reporter on this story: Michelle Fay Cortez in Minneapolis at mcortez@bloomberg.net
To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net
