Covidien Swallows Up Pillcam® Technology with Given Imaging Acquisition

Covidien plc is to acquire Israeli Pillcam® purveyor Given Imaging, Ltd. in a deal worth $860 million net of cash and investments.

Background

We’ve been avid followers of Given Imaging and its interesting family of swallowable “capsule” endoscopic camera, known as Pillcam® technologies. PillCam is a minimally-invasive, non-sedation, swallowed optical endoscopy technology for the small bowel, oesophagus and colon. Given Imaging provides one of the broadest technology platforms for visualizing, diagnosing and monitoring the digestive system, so it almost seems a shame that it’s being absorbed into one of the medtech leviathons relatively early in its journey. There’s little doubt however that it represents a good catch and strategic fit for Covidien.

Given Imaging has seven product lines across 21 GI disease states. The company also offers industry-leading GI functional diagnostic solutions including ManoScan® high resolution manometry, Bravo® capsule-based pH monitoring, Digitrapper® pH-Z monitoring and SmartPill® motility monitoring systems.

As ever in these circumstances, the transaction is subject to customary closing conditions, including Given Imaging shareholder approval and the receipt of certain regulatory approvals, and is expected to be completed by March 31, 2014.

The Boards of Directors of both companies have approved the transaction, and the Boards of Directors of DIC, Elron and Rdc, owners of 44 percent of Given’s outstanding shares, have approved voting in favor of the transaction. DIC has also entered into a customary voting agreement with Covidien.

Covidien says it intends to finance the transaction through cash on hand and will report Given Imaging within the Medical Devices business segment. Upon closing of the transaction, Covidien says it expects Given Imaging will add between $40 and $50 million per quarter in incremental revenue to the Medical Devices segment.

The acquisition will provide Covidien with additional scale and scope to serve the multibillion dollar global gastrointestinal market.

Company comments

for Covidien

“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. “Adding Given’s portfolio of diagnostics to our portfolio accelerates Covidien’s strategy of providing physicians with products that support the patient along the care continuum from diagnosis to treatment. It also confirms our leadership in developing less-invasive screening, diagnosis and treatment solutions that can improve patient outcomes and lower healthcare costs.”

for Given Imaging

“Given Imaging revolutionized GI diagnostics over 12 years ago with the launch of PillCam and created an entirely new diagnostic category — capsule endoscopy. The combination of Covidien’s established global presence and Given Imaging’s innovative capabilities has the potential to transform this market,” said Homi Shamir, President and CEO, Given Imaging Ltd. “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.”

Source: Given Imaging, Ltd., Covidien plc.

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