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Covidien (COV) Paying $680 Million for Camera-in-a-Pill Maker Given Imaging (GIVN)

By  +Follow December 9, 2013 7:38AM
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Medical device manufacturer Covidien plc (COV) said Sunday that it is buying medical technology company Given Imaging Ltd. (GIVN) in a transaction valued at $860 million to expand its gastrointestinal diagnostic business. The news came after three units of Nochi Dankner’s IDB group agreed Saturday to sell their positions in Given Imaging, although the name of the buyer was not disclosed.

Covidien, which is headquartered in Dublin, Ireland, said it will pay $30 per share for Israel-based Given, representing about a 27-percent premium to Friday’s closing price of $23.65 per share of GIVN. The boards of both companies have approved the acquisition, which is expected to close by the end of March 2014.

Capsule Endoscopy

Given Imaging is a pioneer in capsule endoscopy. The company has developed PillCam, an ingestible capsule containing a tiny camera that when swallowed allows clinicians to look inside, and monitor and diagnose the digestive system as an alternative to a traditional endoscopy. Given has been under pressure for nearly two years to sell itself, including investor Discovery Group urging the company in October to initiate a $50 million share buy-back plan and put itself on the auction block again, saying it is chronically undervalued because of poor management. At that time, Discovery Group, which owns about 4 percent of Given Imaging, thought the company could get an offer of up to $30 per share. Looks like it was right.

Covidien said that it will use cash on hand to fund the purchase. Given Imaging will report within the medical devices segment of Covidien and is expected to add between $40 million to $50 million per quarter in incremental revenue to the division. From profit and operating margin standpoints, the acquisition is not expected to be accretive until fiscal 2015.

A Strong Q3 for Given Imaging

During the third quarter ended September 30, Given Imaging generated $50 million in sales, up 10 percent from the year prior quarter. Adjusted earnings were $8.2 million, or 25 cents per share, up 4 percent from Q3 2012. Global PillCam sales increased 9 percent during the quarter to 63,500 capsules. Worldwide sales of GI diagnostics products improved by 15 percent to $15.3 million. By integrating the Given Imaging operations, Covidien will be able to leverage its global reach to further bolster sales of Given’s products.

“We believe GI is one of the most attractive specialty procedure areas. Acquiring Given will enable Covidien to significantly expand its presence in a $3 billion GI market,” said Bryan Hanson, Group President, Medical Devices & U.S., Covidien, in a statement today.

“After thoroughly evaluating our strategic options we determined that this transaction is in the best interests of Given Imaging, its shareholders and employees and provides unique benefits to patients globally,” added Homi Shamir, president and chief executive at Given Imaging Ltd.

Shares of GIVN jumped ahead to near the buyout price at the opening bell. Through Friday’s close, the stock price was up about 33 percent in 2013. Shares of COV, which were up 28 percent in 2013 through Friday, have inched up about half a percent in Monday morning action to $68.48.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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Results for COV
DailyStockPicks
1 Sep 15 06:59:44
$ANFI huge bounce play like $ACI. 100%+ upside potential P/E of 3 $CMCSA $COV $PBR $PRU $MRO $DFS investors read http://t.co/L1jwUV6Bag
Sean Messenger
31 Aug 15 17:11:23
For reference, $COV acquired Nfocus Neuromedical in Feb 2013 for less than half what $MDT is paying today for Medina
Sean Messenger
31 Aug 15 17:08:34
Medina Medical was a startup in "stealth mode" that $MDT had already invested in (as $COV, I assume)
Carpe DM, Inc.
31 Aug 15 14:35:08
RT @TheDustman911: Investors catching wise $UNIS - The Curious Case of Unilife http://t.co/OSWzl5USQO $IMNP $ONTX $PLPL $MRK $BMY $COV $BDX…
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31 Aug 15 14:18:42
RT @TheDustman911: $UNIS - The Curious Case of Unilife http://t.co/OSWzl5USQO $BDX $COV $PODD $MRK $SNY $DSKX $AMBS $GALT $IMMU
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31 Aug 15 10:42:07
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Harry Walkman
31 Aug 15 08:37:28
$COV Medtronic Completes Covidien Acquisition for $50B http://t.co/6t3dI7D5YB
DailyStockPicks
31 Aug 15 05:53:34
$ANFI huge bounce play like $ACI up 18% on Friday. 100%+ upside potential $CMCSA $COV $PBR investors read http://t.co/L1jwUV6Bag
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30 Aug 15 23:09:16
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Jose A Perez
30 Aug 15 17:41:27
Investors will see how well Medtronic, has integrated its January completion of a $49.9bn takeover of Ireland-based Covidien $mdt $cov
marvinjr
30 Aug 15 11:28:45
RT @TheDustman911: $UNIS - The Curious Case of Unilife http://t.co/OSWzl5USQO $BDX $COV $PODD $MRK $SNY $DSKX $AMBS $GALT $IMMU
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30 Aug 15 08:02:23
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Monica Thomas
30 Aug 15 08:02:20
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iHangout
30 Aug 15 05:19:09
chartguy89: 2015 Trending Stocks: COV -8.05% Stock Charts $COV Covalon Technologies http://t.co/0DtRJnbXiY
chartguy89
30 Aug 15 05:11:38
COV -8.05% Stock Charts $COV Covalon Technologies Ltd. (CVE) Last Updated: 08/30/2015 07:11:45 COV Stock Chart http://t.co/9oe9JZYBX0
Zambion
29 Aug 15 22:54:24
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29 Aug 15 22:33:22
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MusicFinder
29 Aug 15 16:34:28
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Affiliate Marketing
29 Aug 15 14:23:36
RT @TheDustman911: $UNIS - The Curious Case of Unilife http://t.co/OSWzl5USQO $BDX $COV $PODD $MRK $SNY $DSKX $AMBS $GALT $IMMU
Anthony Abdul-Haqq
29 Aug 15 09:19:42
RT @TheDustman911: $UNIS - The Curious Case of Unilife http://t.co/OSWzl5USQO $BDX $COV $PODD $MRK $SNY $DSKX $AMBS $GALT $IMMU
Samuel Rengifo
29 Aug 15 07:55:31
RT @TheDustman911: $UNIS - The Curious Case of Unilife http://t.co/OSWzl5USQO $BDX $COV $PODD $MRK $SNY $DSKX $AMBS $GALT $IMMU
US Banking News
29 Aug 15 00:21:00
Covidien plc Director Elinor Caplan Buys $6,400 in $COV http://t.co/NFZmrle9qD
US Consumer News
29 Aug 15 00:20:54
Covidien plc Director Elinor Caplan Buys $6,400 in $COV http://t.co/1iEAnLwtOr
Consumer News
29 Aug 15 00:14:29
Covidien plc Director Elinor Caplan Buys $6,400 in $COV http://t.co/d6eyMtovKD
Daily Contracts
28 Aug 15 14:20:01
Real-Time feed of company contracts, original agreements and executive updates from $COV http://t.co/7sENsarx1h
Edward Fine
28 Aug 15 12:28:53
Watch the last trade of the day. Bet its a big block. $UNIS - The Curious Case of Unilife http://t.co/OSWzl5USQO $RTRX $AMGN $RVP $COV
Carpe DM, Inc.
28 Aug 15 11:48:07
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Edward Fine
28 Aug 15 11:39:20
Investors catching wise $UNIS - The Curious Case of Unilife http://t.co/OSWzl5USQO $IMNP $ONTX $PLPL $MRK $BMY $COV $BDX $SNY $PFE
Michael Goldberg
28 Aug 15 11:21:08
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John Ablemann
28 Aug 15 11:04:07
$COV Announcement under Irish Takeover Rules -- Results of Covidien plc's ... http://t.co/1s1LSJaECv
Edward Fine
28 Aug 15 09:07:38
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DailyStockPicks
28 Aug 15 07:58:27
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DailyStockPicks
28 Aug 15 06:00:44
$ANFI huge bounce play as short attack put in doubt. 100%-200% upside potential $CMCSA $COV $PBR investors read http://t.co/L1jwUV6Bag
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27 Aug 15 11:05:31
$COV Announcement under Irish Takeover Rules -- Results of Covidien plc's ... http://t.co/ATGEnhWhxd
James P Worthy
27 Aug 15 11:05:22
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27 Aug 15 07:26:19
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27 Aug 15 05:04:44
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Forex First Aids
27 Aug 15 04:30:05
RT @OptionsHawk: The $COV deal did wonders for $MDT stock, though much about the inversion back then, now $STJ / $ABT , old article http://…
Joe Kunkle
27 Aug 15 04:29:36
The $COV deal did wonders for $MDT stock, though much about the inversion back then, now $STJ / $ABT , old article http://t.co/o0IhPnIlLH
Harry Walkman
26 Aug 15 09:03:59
$COV Announcement under Irish Takeover Rules -- Results of Covidien plc's ... http://t.co/lUmbjoA7Yp
Thomas Collins
26 Aug 15 09:03:31
$COV Medtronic Completes Covidien Acquisition for $50B http://t.co/4F3wkg3UNn
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By  +Follow December 9, 2013 7:38AM
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