Nearly four months after Covidien ($COV) disclosed plans to sell its Confluent Surgical product line to Integra LifeSciences ($IART), the companies finalized the deal for $235 million in cash.
The agreement, announced Oct. 31, 2013, gives Integra access to Covidien's DuraSeal, VascuSeal and SprayShield lines of soft tissue repair products. According to a statement released by the company in October, the product line brought in approximately $65 million in sales in 2012. Integra planned on paying $235 million up front and another $30 million for performance milestones. Covidien and Integra expected the sale to close by March 2014.
Both companies stand to benefit from the deal: A Covidien executive said when the deal was announced in October that the sale allows it to "better focus resources on its global strategic priorities." This includes expanding the company's presence in emerging markets and focusing on new technologies like renal denervation and treatments for peripheral artery disease. In an effort to cut corners, the company announced plans to eliminate jobs and close facilities after spinning off its new pharma segment in 2013.
Integra is also focusing on long-term growth. The company estimated that Covidien's surgical line will add $57 million to $60 million to revenue during the first year, and then grow 3% to 5% annually. In addition, the technology bolsters Integra's own line of neurosurgery products and increases the company's brand recognition, the company said in October.
Covidien expects the transaction to be several cents dilutive to fiscal 2014 earnings per share, but says the underlying strength of its businesses will offset the dilution. The company does not expect the transaction to significantly impact its fiscal 2014 outlook, the statement said.
- here is Covidien's statement