Medtronic just acquired a 19% stake in LifeTech Scientific Corp., a Chinese maker of surgical instruments. This was a $46.5 million acquisition, with a $19.6 million note that is convertible to a stake of approximately 7.5%. In September Medtronic acquired the Chinese spine and joint maker Kanghui Holdings for $800 million.
Through its newest acquisition with LifeTech, Medtronic is now able to distribute LifeTech products. Medtronic said it may help with product development. LifeTech has sales forces in thirty countries which will help Medtronic to expand even more. They have been focused on Chinese growth for a while and even added 1,500 employees in 2012 – the majority of which were in China and India.
The Foolish Conclusion…
Diabetes will play a serious role in all of these companies moving forward. Rates of people with the disease are growing and unfortunately I don’t see why they would stop. Obesity is often followed by type two diabetes. As an investor and a type one diabetic myself, I am well aware of the complications. Diabetes is the leading cause of blindness, kidney failure, and accounts for more than 60% of all non-traumatic lower limb amputations. American’s spend approximately $200 billion as a direct result of diabetes every year.
It still appears that most of these companies should generate interest from all types of investors. Medtronic appears to be in prime position for growth, and is still fairly priced at 8.2% FCF yield. For bargain investors, Novo Nordisk is the cheapest buy with a 17% FCF yield. This doesn’t take anything away from the other companies as none of them are particularly expensive. The most expensive is Johnson and Johnson who shows a 6.1% FCF yield. There is risk in all investments, but all of these companies seem to be in a position to perform well.
The article The Expense Of Diabetes: Is It Worth It? originally appeared on Fool.com and is written by Tyler Wofford.
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