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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.


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Results for COV
Zacks.com
2 Sep 14 12:58:45
Which medical-equipment stocks should you buy? $BSX $MDT $DGX $SYK $ZMH $COV $STJ $LH $ECTE $BONE $INGN http://t.co/RtkNyidswy
Business News
2 Sep 14 12:13:04
$COV: More Obstacles Erected For The Covidien-Medtronic Merger http://t.co/vDah63mGhm http://t.co/RP6Fsstufw
Brian Antonich
2 Sep 14 11:24:00
“@zbiotech: white house spokesman josh earnest says 'no timeline' on dealing with inversions” $QLTI $MDT $COV $AUXL $THI $BKW
Printer Advice
2 Sep 14 11:06:50
RT @Xconomy: Raleigh-Durham Roundup: Sapheon, Cree, Red Hat, & More | http://t.co/xFiahG4NFM $COV $MDT $CREE $RHT
Zacks.com
2 Sep 14 11:00:56
It it time to buy medical-equipment stocks?$BSX $MDT $DGX $SYK $ZMH $COV $STJ $LH $ECTE $BONE $INGN http://t.co/tMtQIo6Aq3
Xconomy
2 Sep 14 11:00:25
Raleigh-Durham Roundup: Sapheon, Cree, Red Hat, & More | http://t.co/xFiahG4NFM $COV $MDT $CREE $RHT
medtech[y]
2 Sep 14 08:00:53
Flashback thread going strong: Great conversation on PillCam and their acquisition by @Covidien |http://t.co/zTQQCjp6v3 @GivenImaging $COV
Market Int Center
2 Sep 14 07:13:59
Covidien $COV Trading Near $86.20 Support Level ( http://t.co/Uz40mwKEby )
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1 Sep 14 21:12:48
$COV: Allergan Inc. (AGN), DIRECTV (DTV), Covidien plc (COV): Paulson & Co's New ... http://t.co/jRawXIi2lZ http://t.co/V3QqCyIeLn
Ticker Report
1 Sep 14 04:43:06
Covidien plc VP Coleman N. Lannum III Purchases 3,338 Shares $COV http://t.co/kDWxqVfB6K
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30 Aug 14 04:13:39
Medtronic to cover Executives’ tax bills of $63 million in Covidien deal http://t.co/EEMPxGL9J5 $COV $MDT
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29 Aug 14 15:13:01
$COV: Covidien Opens Advanced Medical Technology Center in Brazil http://t.co/g8NXIob4QU http://t.co/EpWDTj4jRf
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29 Aug 14 13:31:51
$COV More Obstacles Erected For The Covidien-Medtronic Merger http://t.co/rzB36nPJKh
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29 Aug 14 12:29:58
Medtronic will pay CEO's $25 mln tax bill on Covidien deal: http://t.co/FQPpzsZYFI $MDT $COV
Michelle Fay Cortez
29 Aug 14 09:53:48
How many of Medtronic's 664+ page filing on the $COV deal wil you read? Make sure to look in the right spot (ie not under the old $MDT).
Varun Saxena
29 Aug 14 08:58:50
August is slow, but news from $MDT has been keep us afloat. Acquisitions, inversion/ $COV deal, and new products: http://t.co/BTEF5O5hlH
Shweta
29 Aug 14 08:02:12
(1/2) #Medtronic #acquisition could cost CEO @MedtronicCEO $25M - but he won't pay it http://t.co/Uxh92Hgx3I $MDT $COV | Via @MSPBJnews
Business Headlines
29 Aug 14 07:13:12
$COV: Covidien plc: Covidien Acquires Venous Disease Treatment Developer ... http://t.co/jrOc0Y2vAl http://t.co/jC08K41wL6
Joe Carlson
29 Aug 14 06:59:32
Some light reading: Medtronic's amended disclosure on the Covidien deal. (Runs to 419 pages plus exhibits) http://t.co/b7E9tZIq2T $MDT $COV
Angry Arb
29 Aug 14 05:29:45
$COV $ABBV ObamaCare contract muddles Dem message on tax dodgers http://t.co/4cm6jr0GuV
Ticker Report
29 Aug 14 05:28:37
Covidien plc VP Coleman N. Lannum III Acquires 1,736 Shares $COV http://t.co/IisERwADMV
Sleek Money
29 Aug 14 05:22:54
Insider Buying: Coleman N. Lannum III Acquires 3,338 Shares of Covidien plc Stock $COV http://t.co/oGslhx7Xi0
TradeXchange
29 Aug 14 05:17:39
Top Inside Purchases - $COV VP 3338 $87.23 $SJI Director 4436 $57.34 $STKL Director 5000 $13.19 $PGEM Director 25000 $11.32
Stocks in News
29 Aug 14 05:12:58
$COV: [$$] FDA Approves Changes to Production of Recalled Covidien Devices http://t.co/TFASwZDfYS http://t.co/ln86v5pvju
Alysia Sarkisian
29 Aug 14 05:01:41
RT @SeekingAlpha: http://t.co/w0OSNwGeZw Daily Round Up 8/28/14: Republic Services, OPKO Health, Saba Software A... http://t.co/ZXPCe9hdnb …
Evener Investment
29 Aug 14 05:00:29
RT @SeekingAlpha: http://t.co/w0OSNwGeZw Daily Round Up 8/28/14: Republic Services, OPKO Health, Saba Software A... http://t.co/ZXPCe9hdnb …
Seeking Alpha
29 Aug 14 04:56:27
http://t.co/w0OSNwGeZw Daily Round Up 8/28/14: Republic Services, OPKO Health, Saba Software A... http://t.co/ZXPCe9hdnb $COV $DDD $EPZM
FonsieTrader
29 Aug 14 04:20:36
Bearish MACD Crossovers 1/2 $BK $BTU $COTY $COV $EXPE $FCEL $FDX $FSLR $FTNT $GES $GOL $GOOGL $GRMN http://t.co/DZL04indph
InterCooler
28 Aug 14 17:36:15
Covidien plc VP Purchases $291,174 in Stock $COV http://t.co/D7S13a2A2a
Stock Signaling
28 Aug 14 17:01:06
After Hours Volume Leaders: $BRCD $CHK $CENX $JPM $PGR $IG $WDAY $WSM $BBY $AMAT $T $RFMD $TQNT $COV $CMCSA http://t.co/Vtx6dLy0Nw #markets
US Banking News
28 Aug 14 16:29:32
Covidien plc VP Buys $291,174 in Stock $COV http://t.co/hRKw3mlQ1p
Market News
28 Aug 14 14:14:24
$COV: [video] David Marcus Discusses the Policy Aspects of Corporate Inversions http://t.co/XEQQHKXdaF http://t.co/XPG5jMHjBF
InsiderReports
28 Aug 14 13:12:12
Coleman N. Lannum III (Vice President) bought $COV shares for 213,000$. http://t.co/2L1yD81ftm
Market Int Center
28 Aug 14 12:31:52
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28 Aug 14 11:36:31
RT @philstockworld: Are Corporate Taxes Going to Destroy Our Economy? $MDT $COV $AZN $PFE -- http://t.co/14h7TCbxJD
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28 Aug 14 11:00:21
Covidien Continues to Shop Pre-Medtronic Merger http://t.co/MKG3NLjL4A $COV $MDT #meddevice #medtech
MedTechWorld
28 Aug 14 11:00:16
Covidien Continues to Shop Pre-Medtronic Merger http://t.co/H85CECWIXl $COV $MDT #meddevice #medtech
MedTechWorld
28 Aug 14 10:53:30
Covidien Continues to Shop Pre-Medtronic Merger http://t.co/pR4mlAiR5j $COV $MDT #meddevice #medtech
Qmed
28 Aug 14 10:53:30
Covidien Continues to Shop Pre-Medtronic Merger http://t.co/WiDOwFIFSr $COV $MDT #meddevice #medtech
Market Updater
28 Aug 14 09:12:56
$COV: Covidien's First Technology Center in Brazil, Shares Gain http://t.co/LLOqBuMDfw http://t.co/QjSDVYjcfk
Varun Saxena
28 Aug 14 08:52:02
Between new Brain project initiative and 2 recent $COV buys + $BSX's buy of Bayer's devices, peripheral devices are officially a thing.
Varun Saxena
28 Aug 14 08:50:46
Between new Brain project initiative and 2 recent $COV buys + $BSX's buy of Bayer's devices; peripheral devices are officially a thing.
WCTI Partners
28 Aug 14 08:50:27
RT @_A_Collins: Covidien buys medical device maker Sapheon http://t.co/2PHr0Zw1GL $COV
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28 Aug 14 08:42:17
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28 Aug 14 08:41:57
Covidien buys medical device maker Sapheon http://t.co/2PHr0Zw1GL $COV
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Covidien plc has acquired medical device maker Sapheon http://t.co/Gqpu01mlZC $COV
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Covidien plc VP Acquires $151,831 in Stock $COV http://t.co/L3Dh7wOgpJ
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28 Aug 14 06:20:42
Covidien snatched up venous disease treatment developer Sapheon for an undisclosed sum: http://t.co/W0MsS4W1nm $COV
MedTechWorld
28 Aug 14 06:15:45
Medtronic inks some smaller acquisition deals—"smaller" as in only hundreds of millions of dollars http://t.co/v0dwhFWwx4 $MDT $COV
				
				
By  +Follow December 9, 2013 7:38AM
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