Covidien building vascular platform with acquisition of ev3
Date of publication: June 8, 2010
What is the cost of building a world-class position in the endovascular sector?
For Covidien it is $2.6 billion and counting. That is how much Covidien recently paid for ev3 , the leading developer of peripheral and neurovascular disease treatments. The combined company will be a significant force in the vascular market. See this deal illustrated on our M&A Scorecard
Covidien is offering to pay $22.50 in cash for each ev3 share. The acquisition will take place in the form of an all-cash tender offer. Covidien hopes to financed the deal through a combination of cash in hand, commercial paper and bridge facility.
This is the latest in a series of big cash deals announced in recent months (see M&A scorecard) underlining the strategy of cash-rich/growth-starved companies picking off smaller companies. This has been made possible due to a combination companies stockpiling cash during the recent downturn and accessing relatively cheap loans, whilst sellers have been willing to sell on the back of strengthening valuations.
We forecast that future months will see more similar deals where the larger companies identify and acquire small companies which help enforce stated core strategies, funded with cash and low cost borrowing.
Steve Poile
8 June, 2010