December 11, 2013

Covidien acquires medical technology company

A number of different digestive disorders can be monitored and better managed with the help of new gastrointestinal camera technology. For this reason, medical technology companies have been rushing to acquire startups that specialize in this area.

For example, the New York Times reports that Covidien, a health care products company based in Dublin, will acquire the Israeli company Given Imaging for about $860 million. The terms of the technology acquisition deal stipulate that Covidien will receive all of Given Imaging's stock for $30 per share. Currently, shares are trading at about $23 each.

Still, Covidien sees the deal as the key toward its entrance to the gastrointestinal market, which is worth $3 billion.

"Adding Given's portfolio of diagnostics to our portfolio accelerates Covidien's strategy of providing physicians with products that support the patient along the care continuum from diagnosis to treatment," Bryan Hanson, group president of Covidien's medical devices and United States operations, told the news source.

Though Covidien is using cash it has on hand to pay for the acquisition, it expects the deal to pay off quickly. Given Imaging is expected to add between $40 to $50 million in revenue per quarter to the company's medical devices segment.

Meanwhile, Given Imaging expects to benefit from this deal as well.

"After thoroughly evaluating our strategic options we determined that this transaction is in the best interests of Given Imaging, its shareholders and employees and provides unique benefits to patients globally," Nachum Shamir, Given Imaging's president and chief executive, told the news source.