Healthcare products maker Covidien plc (
) said Tuesday that it will buy stents and other vascular devices
maker ev3 Inc (
) for $2.6 billion.
Covidien will may $22.50 per share for ev3, which represents an
almost 19% premium over ev3's Friday closing price of $18.92.
CEO Richard Meelia said in a press release that the acquisition
is "in line with our strategy of becoming a leading partner with
vascular surgeons, neurosurgeons, interventional cardiologists and
Covidien said the deal would likely close by the end of July. It
will negatively impact 2010 and 2011 earnings by 5 to 8 cents per
share and 10 to 15 cents per share, respectively.
Covidien shares were mostly flat in premarket trading
The Bottom Line
We had removed shares of COV from our recommended list back on
October 6, 2008, when the stock was trading at $52.19. The company
has a 1.70% dividend yield, based on Friday's closing stock price
of $42.39. The stock has technical support in the $38-$40 price
area. If the shares can firm up, we see overhead resistance around
the $44-$46 price levels. We would remain on the sidelines for
Covidien plc (
) is not recommended at this time, holding a Dividend.com DARS™
Rating of 3.4 out of 5 stars.
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