By Michael Fitzhugh
Covidien (COV), a global medical equipment and pharmaceuticals company, is moving to bolster its growing vascular intervention business by acquiring the medical device maker ev3 (EVVV) for $2.6 billion. The acquisition is likely to play a key part in helping Covidien achieve the 9 percent to 12 percent 2010 net sales growth it expects to post in its medical devices segment, as compared to 2009. It expects sales in its pharmaceuticals and medical supplies units to be flat.
Once part of Tyco HealthCare, Dublin, Ireland-based Covidien has made a string of acquisitions during the past few years, including the California-based companies, VNUS Medical and Bacchus Vascular, which have since become the core of its growing vascular business.
The acquisition of ev3 expands Covidien's offerings with products focused on identifying and treating peripheral vascular disease, including, in particular, lower extremity arterial disease and neurovascular disease.
Covidien sees the potential for “good double digit growth” in the non-heart-related vascular treatment area, says Joe Almeida, president of Covidien's Medical Devices. He made the remark to investors at the Bank of America Merrill Lynch Healthcare Conference in May.
The deal will “enable Covidien to significantly expand its presence in the vascular market and is in line with our strategy of becoming a leading partner with vascular surgeons, neurosurgeons, interventional cardiologists and interventional radiologists,” says Richard Meelia, Covidien's president and CEO.
Covidien will pay $22.50 per share for all of ev3's outstanding shares, representing a 19 percent premium on ev3's pre-announcement share price. The boards of both companies have unanimously approved the transaction, which is expected to close by July 31.