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Covidien Takes Over superDimension

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Leading health care products maker Covidien recently revealed a definitive agreement to take over superDimension Ltd., a private company located in Israel. superDimension is engaged in manufacturing less intrusive interventional devices for the lungs.

Covidien will acquire superDimension for about $300 million, with possible earn out payments in future. The transaction is not expected to have a material impact on fiscal 2012 sales and slightly dilutive impact on earnings per share. The company will report the acquisition in the Endomechanical sub segment of the Medical Devices segment. 

superDimension had yearly revenue of about $30 million. Its know how provides less invasive access to lesions embedded in the lungs and mediastinal lymph nodes. By prolonging the reach of orthodox bronchoscopes, the company’s offerings permit better examination of lesions in the lungs.

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 - Free Report) , Becton Dickinson (BDX - Free Report) and C.R. Bard , 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 are currently Neutral on the stock, supported by a short-term Zacks #3 Rank (Hold).

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