Covidien to buy Aspect Medical for $210 mln
CHICAGO - Covidien plans to buy brain monitor maker Aspect Medical Systems Inc for about $210 million, giving the medical products company an expanded presence in the operating room.
The acquisition is the latest in a series of small technology purchases and drug-licensing deals for Covidien. In recent months, Dublin-based Covidien bought Power Medical, which makes surgical cutting and stapling products. It also bought vein treatment product makers VNUS Medical and Bacchus Medical.
We believe Covidien's strategy of adding higher margin, faster growing products and divesting underperforming parts of the portfolio will lead to a more profitable Covidien over time, Leerink Swann analyst Rick Wise said in a note to clients.
Aspect, a developer of monitoring technology used to measure the effects of anesthetics and sedatives on brain function, had revenue of $99 million in 2008.
Aspect's (technology) is recognized as the market leader but did not have the marketing or distribution muscle which Covidien can provide, said Jefferies analyst Peter Bye.
Covidien will pay $12 in cash for each share of Aspect, a premium of about 56 percent over the stock's Friday close of $7.67. Shares of Aspect rose 55 percent to $11.90 in morning trading on the New York Stock Exchange. Covidien shares rose nearly 2 percent to $42.13.
Covidien, which expects to close the deal by year-end, said the acquisition will hurt fiscal 2010 earnings per share primarily due to a one-time restructuring charge. It expects no material impact on its fiscal 2010 sales or operating margin outlook. (Reporting by Susan Kelly in Chicago and Jennifer Robin Raj in Bangalore; Editing by Deepak Kannan and Derek Caney)
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