Covidien to Buy Vascular Device Maker ev3 for $2.6 Billion (COV)

By Staff,

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Healthcare products maker Covidien plc ( COV ) said Tuesday that it will buy stents and other vascular devices maker ev3 Inc ( EVVV ) 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 interventional radiologists."

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 Tuesday.

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 now,

Covidien plc ( COV ) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing Stocks
Referenced Stocks: COV , EVVV

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