The board of directors of both St. Jude Medical and AGA Medical Holdings have approved a definitive agreement to have St. Jude  acquire all outstanding shares of AGA for $20.80 per share in a cash and stock transaction, which will total almost $1.3 billion.

The agreement, which will take place as an exchange offer that will be followed by a merger, will close at the end of the year. St. Jude will also acquire almost $225 million in outstanding debt during the transaction, according to the companies.

Between 2005 and 2009, AGA’s compounded annual growth rate had developed 19 percent. AGA, which develops devices for structural heart disease, commercially sells the Amplatzer Septal Occluder for atrial septal closure, and is approved in the U.S.

Under the completion of the transaction, AGA will become part of St. Jude’s cardiovascular division and AGA President and CEO John Barr will report to the president of St. Jude’s cardiovascular division, Frank Callghan.

The St. Paul, Minn.-based St. Jude said that AGA will continue to run its operations out of its current headquarters in Plymouth, Minn.