Medtronic’s stockwas given a small boost after revealing plans to acquire fellow US groupOsteotech for $123 million, but the latter’s shareprice rocketed 64% followingthe news.

The companies havesigned a definitive agreement under which Medtronic will buy Osteotech, whichspecialises in biologic products for regenerative healing, for $6.50 per sharein cash.

With the moveMedtronic gains access to Osteotech’s portfolio which includes MagniFuse BoneGrafts and Plexur Biocomposites, used in a variety of musculoskeletal surgicalprocedures, and the first product based on its first-in-class HCT (HumanCollagen Technology) platform, for which US regulatory approval is currentlybeing sought.

According toMedtronic, taking Osteotech under its wing will not only complement itsexisting portfolio but also opens doors to several other therapeutic areas,such as joint restruction and sports medicine.

“This acquisitionrepresents a key step in Medtronic's strategy to build a broader business inregenerative biologics,” said Chris O’Connell, Medtronic executive vicepresident and Restorative Therapies Group president. “Osteotech's products andcapabilities will better position Medtronic in today's competitivemusculoskeletal biologics market, and also position the company more broadlyfor the opportunity we see in the future.”

Tom McGuinness,general manager of Medtronic’s Biologics business, noted that the company sees“substantial opportunities during the next five to 10 years to help morepatients with biologics and regenerative therapies”, and that the merger “willonly accelerate our innovation and progress against our goals in helping toalleviate pain, restore health, and extend life for our patients”.