U.S. Markets closed

U.S. Companies Catch World Cup Fever with Foreign Mergers

Catherine Holahan

Medtronic (MDT) is buying Dublin-based Covidien (COV). Horizon Pharma (HZNP) bought Ireland’s Vidara. Pfizer (PFE) tried to buy London-based AstraZeneca (AZN). Who is next on the list?

Deal fever, driven by lower corporate tax rates abroad, has infected the U.S. healthcare industry. And StockTwits’ investors and analysts have some ideas about which foreign targets might be on U.S. firms shopping lists.

Screen Shot 2014-06-16 at 10.52.01 AM

In a note to investors Monday morning, Needham analyst Mike Matson maintains that larger medical companies are seeking to buy foreign companies that can give them larger scale and help cut costs via better tax rates, eliminating similar jobs or facilities. Matson said tax inversion could drive a merger with Netherlands-based Orthofix (OFIX), a medical device company with a $647 million market cap, or Tornier (TRNX), a $1.12 billion medical device company based in Amsterdam that is focused on orthopedics.

Investors on StockTwits saw reason in Matson Orthofix pick. They noted that insiders are buying the stock, a sign that employees expect good things to come from the company and could be hearing rumors of an acquisition. Orthofix shares rose 3% in the wake of the Medtronic, Covidien deal.

Screen Shot 2014-06-16 at 10.52.09 AM
Screen Shot 2014-06-16 at 10.52.16 AM
Screen Shot 2014-06-16 at 10.52.22 AM

An email to an Orthofix media relations officer requesting comment was not immediately returned Monday.

Matson also said London-based Smith & Nephew (SNN) is likely to become a target for Stryker Corporation (SYK), the $32.2 billion medical device giant based in New Jersey. Stryker makes bone cutting surgical equipment and joint replacement products, among other things.

Other analysts agreed.

Screen Shot 2014-06-16 at 10.52.30 AM