(Bloomberg) — Covidien Plc, the medical-equipment company spun off from Tyco International Ltd., agreed to buy ev3 Inc. for $2.6 billion to add products for heart disease.
Covidien will pay $22.50 a share in cash for Plymouth, Minnesota-based ev3, the companies said in a statement today. Dublin-based Covidien is paying 19 percent more than the May 28 closing price for ev3’s stock.
The acquisition will add ev3’s stents, angioplasty balloons, plaque removal systems, and catheters to treat disease of the arteries to Covidien’s product range, which specializes in staples, suture needles, wound care, scalpels and products used in surgery. The deal will give Covidien a bigger stake in the vascular surgery market, said Covidien Chief Executive Officer Richard Meelia in a conference call.
“Ev3 significantly expands our presence in the $3 billion peripheral vascular market and gives us a strong entry point into the $1 billion neurovascular market,” said Meelia. “As there is virtually no product overlap we foresee a very straight forward integration plan.”
Covidien fell 72 cents, or 1.7 percent, to $41.67 at 11:01 a.m. in New York Stock Exchange composite trading. Ev3 rose $3.31, or 17 percent, to $22.23. Ev3’s shares had risen 42 percent this year before today.
Meelia has been making acquisitions and divestitures since Covidien separated from Tyco in 2007 as he tries to reshape the company. In May, Covidien said it would sell its specialty chemicals business for $280 million after paying $485 million last year for Vnus Medical Technologies.
Acquisition Talks
Covidien had been following ev3 for more than a year and acquisition talks began several months ago, Meelia said. The bidding was competitive, he said.
“We will continue to look at deals in other areas that have the right kind of returns for us and add value,” Meelia said in a conference call.
The transaction is expected to be completed by July 31, the companies said. Ev3’s directors and officers plan to tender their shares, according to the statement. Warburg Pincus Equity Partners LP, which owns 24 percent of ev3, supports the deal, the companies said.
The purchase will reduce Covidien’s earnings per share this year and next, according to the statement.
Covidien said it has no plans to move any of ev3’s operations out of Minnesota. Ev3 had 1,350 employees at the end of 2009.
–With assistance from Phil Serafino in Paris. Editors: Bruce Rule, Lisa Rapaport
To contact the reporter on this story: Shannon Pettypiece in New York at spettypiece@bloomberg.net.
To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net.

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