Medtronics Inc. (NYSE:MDT) has found itself abound in rumors recently. The company told shareholders at last Thursday's annual meeting that the company was not for sale, despite rumors that Johnson & Johnson was preparing a bid. Medtronics CEO Art Collins insisted that the company had not been
seeking a buyer; however, despite this rebuke, the possibility for a takeover bid still exists. The idea of a possible buyout came as a result of the company's sliding stock price, which dropped from $60/share earlier this year down to its current range in the $40s. The company attributed this drop to the industry-wide recall of cardioverter defibrillators along with reduced coverage of medical devices by government programs and lower ICD revenues. Typically, when companies experience such drops, they become vulnerable to buyout offers and even hostile takeover bids.
Interestingly, on August 28th three company directors purchased or acquired large blocks of shares at market close. These transactions included the
acquisition of over 1,500 shares, an open market
purchase of 1,000 shares, and a string of open market
purchases totaling 25,000 shares. The transactions all occurred on August 24th - the day of the annual meeting. Are these insiders simply making regular purchases based on the notion that their company will perform well in the future, or do they know something? Although there is an absence of call options (which are the most telling indicator that mangement knows something that would affect the price in the short-term), the purchases do raise question especially since this is the first instance of open market purchasing (as opposed to acquisition) in several months. This is definitely a stock to
keep an eye on...
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