NEW YORK (Reuters) - Carson Block, the head of short-selling firm Muddy Waters, said on Friday that shares of medical device maker St. Jude Medical Inc (>> St. Jude Medical, Inc.) could fall to $55 per share or lower if Abbott Laboratories' (>> Abbott Laboratories) deal to buy the company falls apart.

"If the deal were to break, I think that we could be $55 or lower," Block told cable television network CNBC. That implied a drop of more than 27 percent from St. Jude's current share price.

St. Jude agreed in April to be purchased by Abbott Laboratories. Muddy Waters unveiled a "short" bet on Thursday that St. Jude's shares would fall because of cyber security vulnerabilities in a cardiac device.

St. Jude said Friday that Muddy Waters' report on its heart devices was "false and misleading." Shares of the company, which were halted before the company's statement, resumed trading and were last down 0.18 percent at $77.68 a share.

Block said on Thursday the firm's position was motivated by research from a cyber security firm, MedSec Holdings Inc, which has a financial arrangement with Muddy Waters. MedSec asserted that St. Jude's heart devices were vulnerable to cyber attack and were a risk to patients.

A MedSec report warned of two primary hacks on St. Jude pacemakers and defibrillators: One that could cause implanted devices to pace at potentially dangerous rates and one that drains their batteries.

MedSec approached Muddy Waters about three months ago and the two struck a deal under which Block agreed to hire MedSec as a consultant, pay it a licensing fee for research and a percentage of any profits from the investment, Block told Reuters.

Reuters was not able to confirm the allegations by Block and MedSec, a firm founded 18 months ago focusing on cyber vulnerabilities in the healthcare industry. The allegations were detailed in a report published on the Muddy Waters website.

(Reporting by Sam Forgione; Editing by Jeffrey Benkoe and James Dalgleish)

Stocks treated in this article : Abbott Laboratories, St. Jude Medical, Inc.