Covidien Signs Agreement to Acquire ev3

Covidien (Dublin, Ireland), a global supplier of healthcare products, has signed an agreement to acquire ev3 Inc. (Plymouth, MN, USA), a global endovascular company focused on identifying and treating peripheral vascular disease. Covidien was sanctioned a loan of US$1.25 billion Morgan Stanley to buy the outstanding shares of ev3 for a total amount of $2.6 billion; the transaction is expected to close by July 31, 2010.

The arrangement is intended to expand Covidien's presence in the high-margin, fast-growing vascular device market with a high unmet need. In 2009, Covidien strategically created the new vascular therapies business unit under the umbrella of its medical devices business. This niche segment was developed primarily through the acquisition of California based VNUS Medical Technologies Inc. in May 2009 , a follow up to the March 2009 purchase of Bacchus Vascular Inc. The purchase of ev3 only corroborates Covidien's immediate focus on enhancing its vascular business through strategic mergers and acquisitions rather than investing in the creation of this novel product line from scratch.

The deal with VNUS Medical in 2009, helped add products for minimally invasive treatment of venous reflux disease to Covidien's portfolio, while that with Bacchus Vascular added products pertaining to the treatment of deep vein thrombosis. Similar tactile benefit is expected to be accrued by ev3's neurovascular business, especially from the ones for which the Irish firm does not have products, i.e., peripheral vascular and neurovascular products.

Covidien, whose products are sold in more than 140 countries, is expected to benefit from the addition of ev3's bestselling products such as the plaque-excision systems, angioplasty balloons, and stents, the mainstay of ev3's capabilities. Additionally, ev3's strong pipeline of products and new product launches, its experienced sales channel and world-class physician training program in major global and emerging markets, will impel Covidien's vascular business unit, which is expected to show considerable gains especially in the years leading to 2012 and beyond.

Richard J. Meelia, chairman, president and CEO of Covidien said, "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."

ev3 simultaneously will be able to leverage on Covidien's extensive global presence and physician pool across 60 countries worldwide. The deal will also provide the financial opportunity for ev3 to focus on the development of endovascular products, which remains in the forefront of the company's current clinical studies and product development plan.

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