>CAMH – felt the deal wasn't as bearish as some here thought and it seems the market might agree.<
For now, I’m sticking to my story that this deal is bearish in spite of the 20% pop today.
If you’re a CAMH shareholder, ask yourself this: Was this the deal you were hoping to ink with an ICD company? Truthfully? If your answer is Yes, I’d like to know why.
From my vantage point, there are several negatives:
1. Although the tie-in will presumably allow STJ’s salesforce to generate more referrals from cardiologists to ICD-implantation specialists, STJ will have no incentive to sell to the implantation specialists themselves. In fact, STJ has a strong disincentive to do so. (Think about it!)
2. CAMH raised 2007 sales guidance by a paltry $2M on account of the deal! They say there will be a large sales uptake in the second and third years but, if this is such a great idea, why will the uptake be so slow? I’m not convinced.
3. Since the deal is exclusive in North America, CAMH may now get less help from the other ICD players, MDT and BSX. (CAMH ranks third in the ICD market behind those two.)
4. My take from the CC is that CAMH will be paying a hefty commission on each unit sold by STJ, perhaps as much as $8-10K. (The actual amount hasn’t been disclosed.) Of course, this will be well worth it if STJ really increases volume to a meaningful degree; however, if the volume increase is modest, CAMH won’t be any better off than it was on its own.
5. The CC had more than a modicum of hype, and I find this troubling.
JMHO, FWIW
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