Covidien Buys Given To Build GI Business Base In Biggest Israeli Medtech Deal

Article preview from IN VIVO - December 23, 2013

Three years ago, Covidien signaled its intention to build a gastrointestinal device business with its acquisition of Barrx Medical and its esophageal ablation technology for Barrett’s esophagus. Since then, the industry has been waiting for Covidien to follow through on its strategy to expand its presence in the $3 billion GI market, and that next step came with the company’s recent $860 million acquisition of publicly traded Given Imaging Ltd.

Covidien Buys Given To Build GI Business Base In Biggest Israeli Medtech Deal

Article preview from IN VIVO - December 23, 2013

Three years ago, Covidien PLC signaled its intention to build a gastrointestinal (GI) device business with its acquisition of Barrx Medical and its esophageal ablation technology for Barrett’s esophagus for $325 million up front (and now more than $409 million with milestones, around 10 times revenue). [See Deal] (See "Covidien Still Hungry For GI After Barrx Buy" — IN VIVO, December 2011.) Since then, the industry has been waiting for Covidien to follow through on its strategy to expand its presence in the $3 billion GI market, and that next step came with the company’s recent $860 million acquisition of publicly traded Given Imaging Ltd.[See Deal] Given Imaging pioneered the capsule endoscopy diagnostic market with its innovative camera-in-a-pill, the PillCam − a vitamin-sized, disposable camera system that is swallowed to wirelessly capture endoscopic images of the GI system. (See "Given Imaging: A Capsule View of GI Diagnostics' Future" — IN VIVO, May 2002.) In acquiring Given, Covidien continued to tap into Israel as a source of medtech innovation, following its previous acquisitions of Israeli-based superDimension Ltd. and Oridion Systems. [See Deal][See Deal] Indeed, for all of the device start-ups that have emerged from Israel, that country’s medtech sector has been criticized for not producing a blockbuster deal. This deal answers those critics, amounting to the largest Israeli medtech acquisition.

The $30 per share that Covidien paid for Given represents a 27% premium over its recent stock price and the total price tag was roughly five times its $180 million in annual sales. “Covidien really likes the gastrointestinal space and they’ve been looking to broaden the portfolio,” says Richard Newitter, medical device analyst at Leerink Swann. “This is very Covidien-like, to go after the market-leading technologies and innovative or promising growth areas where they believe they will have the ability to drive market share over time.” Bryan Hanson, Covidien’s group president of medical devices, in a statement said the addition of Given’s technology will extend the company’s GI pipeline from diagnostics to treatment. According to a senior official close to the deal, Covidien has been looking at Given for several years as part of its strategic strategy to expand its minimally invasive surgery (MIS) business in GI, building on other recent acquisitions in an effort to take costs out of surgical procedures. Initially, Given will become part of Covidien’s Early Technology group.

Continued...

Purchase this article online as a PDF and receive it immediately via email. Questions? Call (800) 332-2181. 100% Satisfaction Guaranteed.

Plus:
To find out about more about more about Elsevier Business Intelligence's medical device publications and databases, multi-user access and/or advertising with Medical Devices Today, please contact Kristy Kennedy at (480) 985-9512