Leading health care products maker Covidien recently revealed a definitive agreement to take over Oridion Systems Ltd. The boards of the two companies have inked the deal. Subsequently, a full subsidiary of Covidien will furnish $23.00 for each share of Oridion.
The deal is valued at about $300 million. The agreement is designed like a merger and will be contingent to shareholder approval and other conditions.
Oridion Systems is located in Israel. In 2011, the company had revenues of $64 million. Its offerings check sufficiency of ventilation. They permit medical practitioners to quickly gauge problems in airway passages.
The acquisition is expected to close in the second quarter of calendar year 2012. Covidien does not forecast the deal to materially impact revenues, margin and earnings per share in 2012. The company plans to report the acquired entity in its Oximetry and Monitoring product line, which is a part of the Medical Devices segment.
Covidien is a leading global health care products company with a rich history of developing high-quality products in a cost-effective manner. It competes with Johnson & Johnson (JNJ - Analyst Report), Becton Dickinson (BDX - Analyst Report) and C.R. Bard (BCR - Analyst Report), among others.
Revenues from Covidien’s core Medical Devices segment climbed 6% year over year to $1.98 billion in the most recent quarter, driven by double-digit growth across Vascular and Energy Devices product-lines.
The Vascular business had another strong quarter with revenues soaring 17% to $387 million, spurred by double-digit growth of venous insufficiency and neurovascular products.
Covidien remains committed to rolling out new products and technologies, focusing on the emerging markets, and boosting market share in core segments through investments in sales and marketing infrastructure. However, sustained pricing/procedure volume pressure represents a headwind.
We currently have a Neutral recommendation on Covidien. The stock currently retains a Zacks #2 Rank, which translates into a short-term Buy recommendation.