Covidien (NYSE:COV) has agreed to buy ev3 (NASDAQ:EVVV) for $22.50 per share in cash, for a total of $2.6 billion in an effort to expand its presence in the vascular market.
The acquisition will add ev3's stents, angioplasty balloons, plaque removal systems, and catheters to treat disease of the arteries to Covidien's product range, according to Bloomberg. "With its broad product portfolio, clinical expertise and call-point synergies with our existing vascular franchise, ev3 will be an important addition to our innovative vascular intervention products," says Richard Meelia, Covidien's chairman, president and CEO, in a statement.
As Barron's notes, Covidien has avoided head-on competition with the the likes of Boston Scientific and Medtronic, exploring niche markets instead. In line with this strategy, Covidien had been following ev3 for more than a year and acquisition talks began several months ago, Meelia said during a conference call. The bidding was competitive, he added. "We will continue to look at deals in other areas that have the right kind of returns for us and add value," Meelia said, as quoted by Bloomberg.
But not everyone is on board with the proposed agreement. The law firm of Brodsky & Smith, LLC says it is investigating possible breaches of fiduciary duty and other violations of state law related to the transaction. "The transaction appears to be unfair, in part, given that at least one analyst has set a price target of $27.00 on ev3. In addition, the merger agreement provides for a "Top-Up Option" granting Covidien, under certain circumstances, the right to purchase newly issued shares of ev3, which may allow the merger to be completed without a meeting of ev3 stockholders," the firm says in a statement.
Busy Covidien also announced it is selling its sleep therapy business to PH Invest. Terms of the deal weren't disclosed. In a statement, Covidien says PH Invest will acquire the CPAP and Bi-level products, including the Nancy, France manufacturing facility. Several products, which are sold under the GoodKnight and Sandman brands, are included in this agreement. Financial terms of this transaction were not disclosed.
Finally, Covidien also announced the completion of the previously disclosed sale of its radiopharmacies in the U.S. to Triad Isotopes of Orlando, FL. Financial terms of that transaction were not disclosed.