Large-cap medical technologies company,
) has entered into a definitive agreement to acquire Fremont,
California-based medical device company, CV Ingenuity. Financial
details of the deal were not disclosed by both the parties.
Privately-held CV Ingenuity specializes in the production of
devices used for the treatment of peripheral arterial disease
(PAD). Its offerings are utilized to heal natural vessels, clear
vascular blockages and prevent restenosis. The key product, a
Drug Coated Balloon (DCB) platform with a unique tunable,
rapid-release system is still in the investigational phase.
Covidien plans to integrate the acquired entity in its
Vascular business, under the core Medical Device segment. The
inclusion of CV Ingenuity's strong product pipeline should boost
Covidien's vascular products portfolio and reinforce its leading
position in providing innovative vascular solutions. The deal is
expected to close in the first quarter of 2013.
Covidien plans to invest in research and development (R&D)
to develop CV Ingenuity's product pipeline. Management is hopeful
that by fiscal 2017 the company will receive U.S. Food and Drug
Administration (FDA) approval for a DCB product using the CV
Covidien expects R&D expenses to increase by more than $20
million in the second half of fiscal 2013 and above $30 million
in fiscal 2014. However, despite these higher R&D expenses
along with acquisition-related costs, the company reiterated its
previous fiscal 2013 guidance. Management forecasts adjusted
operating margin in the range of 22%-23% for fiscal
Earlier, in October 2012, Covidien's Pharmaceuticals business,
Mallinckrodt acquired CNS Therapeutics Inc., a St. Paul
Minnesota-based specialty pharmaceutical company, for roughly
$100 million. Covidien plans to spin off its Pharmaceutical
business by mid-2013 to focus on its high-margin surgical
Covidien, with a market-cap of $26.88 billion, is a leading
global health care products company with an impressive history of
developing and manufacturing high-quality products in a
However, Covidien's larger Medical Device unit overlaps the
business of its competitors like
Johnson & Johnson
Becton, Dickinson and Company
C.R. Bard Inc.
We currently have a long-term 'Neutral' recommendation on the
stock, which carries a short-term Zacks #3 Rank (Hold).
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