St. Jude Medical to Acquire EP MedSystems

Business Wire, April 9, 2008

Transaction Will Accelerate St. Jude Medical's Atrial Fibrillation Program

ST. PAUL, Minn. & WEST BERLIN, N.J. -- St. Jude Medical, Inc. (NYSE: STJ) and EP MedSystems, Inc. (NASDAQ: EPMD) announced today that the Boards of Directors of both companies have unanimously approved a definitive merger agreement under which St. Jude Medical will acquire EP MedSystems for approximately $92.1 million.

Terms of the Agreement

Under the terms of the merger agreement, EP MedSystems shareholders will receive $3.00 of consideration for each EP MedSystems share they own, with the option of receiving that amount in cash or St. Jude Medical common stock. The number of shares of St. Jude Medical common stock that EP MedSystems shareholders will receive will be determined based on the average closing price over 10 trading days, ending on the second business day before the transaction closes. The cash and stock elections are subject to pro-ration such that St. Jude Medical will issue 40 percent of the total merger consideration in St. Jude Medical common stock and 60 percent in cash.

In connection with this transaction, St. Jude Medical's Board of Directors has approved an additional stock buyback authorization of $50 million, which increases St. Jude Medical's share repurchase authorization from $250 million to $300 million. The additional buyback authorization will be used to offset the shares issued in this transaction.

The companies anticipate this acquisition will close during the third quarter of 2008. In connection with this transaction, St. Jude Medical will record a special charge for in-process R&D. This acquisition does not change St. Jude Medical's existing guidance for 2008 earnings per share, exclusive of the special charge.

Acceleration of St. Jude Medical's AF Program

Upon completion, this transaction will immediately add two new growth drivers to St. Jude Medical's program for products used in atrial fibrillation (AF) and other electrophysiology (EP) catheterization procedures. This includes the EP-WorkMate[R] computerized electrophysiology workstation with a fully integrated EP-4[TM] Computerized Cardiac Stimulator and expansion options to incorporate the NurseMate[TM] Remote Review Charting Station. The EP-WorkMate[R] platform already enjoys a strong number two share of the global market for EP recording systems in spite of limited sales and marketing resources.

This transaction will also expedite St. Jude Medical's entry into the high-growth intracardiac ultrasound echocardiography (ICE) market with the EP MedSystems ViewMate[R] II intracardiac ultrasound system and the next generation ViewFlex[TM] PLUS ICE catheter scheduled for market release this quarter. This market is growing at an estimated 25 percent to 30 percent per year and includes both electrophysiology and interventional cardiology applications.

"This transaction will accelerate the growth of St. Jude Medical's program to help physicians cure atrial fibrillation," said Daniel J. Starks, chairman, president and chief executive officer of St. Jude Medical. "EP MedSystems' new ClearWave[TM] signal recording technology and its next generation ViewFlex[TM] PLUS ICE catheter will be especially important additions to our AF technology platform."

David Bruce, president and chief executive officer of EP MedSystems, said, "With growth accelerating over the past year, EP MedSystems' products and market position are stronger than they've ever been thanks to the focus and efforts of our employees. This transaction delivers significant shareholder value and enables our key product platforms to benefit from the extensive worldwide distribution, customer support and product development infrastructure of St. Jude Medical. We look forward to working with the St. Jude Medical team toward a seamless combination."

The transaction is subject to certain closing conditions and regulatory approvals, and approval by EP MedSystems shareholders. Following the close of the transaction, Bruce is expected to join St. Jude Medical, and EP MedSystems will become part of the Atrial Fibrillation division of St. Jude Medical.

In connection with the transaction, Gibson, Dunn & Crutcher, LLP is serving as legal counsel for St. Jude Medical. Piper Jaffray & Co. is acting as financial advisor to EP MedSystems, and Morgan, Lewis & Bockius LLP is serving as legal counsel for EP MedSystems.

Earnings Webcast Information

As previously announced, St. Jude Medical will hold a webcast to discuss its first quarter 2008 financial results on Wednesday, April 16, 2008, at 8:00 a.m. CDT. St. Jude Medical will also discuss this transaction at that time. The webcast can be accessed at www.sjm.com

About EP MedSystems

EP MedSystems develops, manufactures and markets a line of products for use in the cardiac rhythm management or electrophysiology market which are used for visualization, diagnosis and treatment of cardiac rhythm disorders. EP MedSystems' EP product line includes the EP-WorkMate[R] computerized electrophysiology workstation, with expansion options to incorporate the NurseMate[TM] Remote Review Charting Station, and the EP-4[TM] Computerized Cardiac Stimulator. In addition, EP MedSystems' intracardiac echo (ultrasound or ICE) ultrasound catheter system, including its ViewFlex[R] intracardiac imaging catheters and ViewMate[R] II ultrasound imaging system, is used for live visualization of devices and anatomy during catheter based procedures in EP and interventional cardiology. Full year 2007 net sales for EP MedSystems were approximately $19 million. For more information, visit EP MedSystems' website at www.EPMedSystems.com