Covidien Acquires ev3 – Analyst Blog

Covidien plc (COV) has decided to acquire all of the outstanding shares of ev3 Inc. (EVVV) for $22.50 per share in cash, for a total of $2.6 billion. The transaction will take place in the form of an all-cash tender offer by a wholly-owned subsidiary of Covidien, followed by a second-step merger. Covidien expects to complete the transaction by the end of July, 2010.

 

On a GAAP basis, Covidien expects the transaction to dilute its fiscal 2010 and 2011 earnings per share. On a non-GAAP basis, the company expects the acquisition to dilute fiscal 2010 earnings per share by 5 to 8 cents and fiscal 2011 earnings per share by 10 to 15 cents. Covidien expects to fund the acquisition with cash on hand, commercial paper and a fully committed bridge facility.

 

The acquisition of ev3 enables Covidien to become a leading endovascular player, with strong positions in both the peripheral vascular and neurovascular markets.

 

Covidien is a global health care company that focuses on creating innovative medical solutions for better patient outcomes. The company operates through three business segments: Medical Devices, Pharmaceuticals and Medical Supplies. Covidien generated total revenue of $10.7 billion in fiscal 2009.

 

ev3 is a Plymouth, MN-based endovascular company that concentrates on catheter-based or endovascular technologies for undertaking minimally invasive treatment for vascular diseases and disorders. The company’s acquired broad product portfolio focuses on applications in each of the three sub-markets of the endovascular device market (ev3) − peripheral vascular, cardiovascular and neurovascular.

 

ev3 competes in the endovascular market with a number of large companies like Boston Scientific Corp. (BSX), Medtronic Inc. (MDT), C.R. Bard (BCR), Cordis and others.

 

Presently, we have a ‘Neutral’ recommendation on ev3.