Covidien has closed its acquisition of Given Imaging, providing the company additional scale and scope to serve the significant medical specialty of capsule endoscopy. Acquiring Given Imaging significantly expands Covidien's business and supports the company's strategy to address key global specialties and procedures.
Under terms of the merger agreement, Covidien acquired all outstanding Given Imaging shares for US$30 per share, or an aggregate consideration of approximately US$860mn, net of cash and short-term investments acquired.
With this acquisition, Covidien believes that it now has one of the broadest portfolios for visualising, monitoring and detecting abnormalities in the digestive system. A key technology in the Given Imaging portfolio is the worldwide market leading product PillCam, a minimally invasive, swallowed optical endoscopy technology for the small bowel, oesophagus and colon that does not require sedation of the patient.
Covidien will report the Given Imaging business within its Advanced Surgical segment. Given Imaging is expected to add between US$40 and $50mn per quarter in incremental revenue. On a reported US GAAP basis, the transaction is expected to be dilutive to EPS in FY2014. On an adjusted basis, excluding one-time items and transaction costs, Covidien expects the transaction to be neutral to EPS in FY14. The transaction is expected to be accretive to EPS both on a US GAAP and on an adjusted basis in FY15 and beyond.
While Covidien has not completed its initial purchase price allocation and the final amount could differ significantly, it estimates incremental intangible asset amortisation from the transaction to be approximately US$35 to US$45mn on an annual basis.