Covidien To Buy Given Imaging For $860 Mln

(RTTNews) - Covidien plc (COV) on Sunday agreed to buy Given Imaging Ltd. (GIVN) for $30.00 per share in cash or a total of approximately $860 million. The acquisition provides Covidien additional scale and scope to serve the gastrointestinal market and supports its strategy to comprehensively address key specialties and procedures globally.

Covidien intends to finance the transaction through cash on hand and will report Given Imaging within its Medical Devices business segment. On completion of the deal, Covidien expects Given Imaging to add $40 million - $50 million per quarter in incremental revenue to the Medical Devices segment.

The Medical device maker anticipates the purchase of Given Imaging to be dilutive to both operating margin and earnings per share on a GAAP basis in fiscal 2014. On an adjusted basis, the transaction is projected to be neutral to operating margin and earnings per share in fiscal 2014.

Covidien expects the deal to be accretive to operating margin and EPS both on a U.S. GAAP and on an adjusted basis in fiscal 2015 and beyond. From a "cash earnings" standpoint, excluding the impact of amortization, the transaction is expected to be accretive immediately on completion.

Covidien is not changing any of its guidance as a result of acquisition of Given Imaging. Subject to customary closing conditions, including Given Imaging shareholder approval and the receipt of certain regulatory approvals, the transaction is expected to be completed by March 31, 2014. The Boards of Directors of both the companies have approved the transaction.

The Boards of Directors of Elron Electronic Industries, Discount Investment Corp and RDC Rafael Development Corp. - owners of 44 percent of Given's outstanding shares, have approved voting in favor of the transaction. Discount Investment Corp has also entered into a customary voting agreement with Covidien.

"We believe Given Imaging is one of the most attractive specialty procedure areas. Acquiring Given will enable Covidien to significantly expand its presence in a $3 billion GI market," said Bryan Hanson, Group President, Medical Devices & U.S., Covidien. "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", he added.

Given Imaging is dedicated to developing innovative diagnostic and monitoring technologies for the digestive system. The company's broad portfolio includes the PillCam, a minimally-invasive, non-sedation, swallowed optical endoscopy technology for the small bowel, esophagus and colon. In total, Given Imaging has seven product lines across 21 GI disease states.

The company also offers industry-leading GI functional diagnostic solutions including ManoScan high resolution manometry, Bravo capsule-based pH monitoring, Digitrapper pH-Z monitoring and SmartPill motility monitoring systems.

COV closed the Friday's regular trading session at $68.07 and GIVN ended the session at $23.65.