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Cyberonics Investors Okay Sorin Deal; LivaNova Coming Up

Cyberonics, Inc. 's CYBX long awaited $2.7 billion cross-border merger with Italy-based Sorin S.p.A. took a big step toward its completion with two consecutive announcements. The first announcement was made on Sep 22, wherein Cyberonics' stockholders approved the proposed merger. Following this, yesterday the High Court of England and Wales issued an order approving completion of the merger and combination into a newly formed company - LivaNova.

Per Cyberonics, more than 98.8% of its shareholders voted in favor of the merger. The figure represents over 84.2% of all outstanding shares of Cyberonics. Notably, the transaction received overwhelming support from Sorin shareholders in May 2015.

With the aforesaid approval from the High Court of England and Wales, the companies expect the merger to be effective from Oct 19, 2015 (12:01 AM London time). Also, on the same day at 12:01 AM EDT, a U.S. subsidiary of LivaNova - Cypher Merger Sub, Inc. will also become effective.

According to the announcement by the companies, Sorin shareholders will receive 0.0472 ordinary shares of £1.00 nominal value each in the share capital of LivaNova for every outstanding Sorin ordinary share held by them. Also, every outstanding share of Cyberonics common stock will be converted into the right to receive 1 ordinary share of £1.00 nominal value each in the share capital of LivaNova. The conversions, however, are subject to certain terms and conditions.

Earlier this month, Cyberonics announced that post merger it will appoint of Vivid Sehgal as Chief Financial Officer (CFO) of LivaNova. It also mentioned that Sorin's Chief Executive Officer (CEO), André-Michel Ballester, will take on the CEO's role for the combined company, while Dan Moore - Cyberonics' CEO - will serve as the non-executive Chairman.

Per the companies, this neuromodulation and cardiovascular alliance will result in the formation of three business units under the combined entity, namely Cardiac Surgery, Cardiac Rhythm Management, and Neuromodulation.

Earlier, Cyberonics noted that LivaNova will have several potential opportunities focused on three multi-billion dollar product categories - heart failure, sleep apnea and percutaneous mitral valve. Particularly, in heart failure, LivaNova will bring forth promising products and is expected to enter the European market in 2015 itself.

LivaNova is expected to benefit from the developing market for active implantable treatments for sleep apnea, with investments aimed at the under-addressed obstructive sleep apnea (OSA) and central sleep apnea (CSA) markets. The implantable devices were recently launched in select European countries.

Additionally, LivaNova is expected to introduce new percutaneous mitral valve replacement/repair products with estimated initial market entry in 2017. Also, Sorin's well-established international operations should accelerate Cyberonics' epilepsy business outside the U.S. as well as integrate its own technology expertise in the future portfolio of neuromodulation products. We believe that this transformational merger, post completion, will hold tremendous potential to add value to investors' wealth.

Zacks Rank

Currently, Cyberonics carries a Zacks Rank #2 (Buy). Other favorably-placed stocks from the medical instruments sector are EDAP TMS SA EDAP , Masimo Corporation MASI and Thoratec Corp. THOR . All three stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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