- Adds significant scale to
vascular platform with strong market positions - Provides broad product
portfolio and robust pipeline in high-growth market
segments - Leverages global
infrastructure, physician education and training
expertise
DUBLIN & PLYMOUTH, Minn., Jun 01, 2010 (BUSINESS WIRE)
–Covidien plc (NYSE:COV) and ev3 Inc. (NASDAQ:EVVV) today
announced that they have signed a definitive merger agreement under
which Covidien will acquire all of the outstanding shares of ev3
Inc. for $22.50 per share in cash, for a total of $2.6 billion, net
of cash acquired. This transaction further accelerates Covidien’s
strategy of building a world-class vascular platform addressing
high-growth markets and positions Covidien to become a leading
endovascular player, with strong positions in both the peripheral
vascular and neurovascular markets.
“The acquisition of ev3 will enable Covidien to significantly
expand its presence in the vascular market and is in line with our
strategy of becoming a leading partner with vascular surgeons,
neurosurgeons, interventional cardiologists and interventional
radiologists,” said Richard J. Meelia, Chairman, President and CEO
of Covidien. “With its broad product portfolio, clinical expertise
and call-point synergies with our existing vascular franchise, ev3
will be an important addition to our innovative vascular
intervention products.”
“We believe this transaction will provide truly unique
opportunities and will create value for both companies’
stockholders, patients and employees,” said Robert Palmisano,
President and CEO of ev3. “We will be able to advance our broad
platform of peripheral vascular and neurovascular technologies with
a leading global healthcare products company that shares our vision
of delivering breakthrough and innovative medical solutions for
improved patient outcomes. In addition, this combination will
provide the opportunity for further innovation to support
endovascular market growth and procedure penetration worldwide,
while our employees will be afforded the opportunity to be part of
a larger organization with greater depth of resources for sustained
success in our industry.”
ev3 Inc. is dedicated to developing innovative, breakthrough and
clinically proven technologies and solutions for the treatment of
peripheral vascular and neurovascular diseases. ev3 offers a
comprehensive portfolio of treatment options, including the primary
interventional technologies used today: peripheral angioplasty
balloons, stents, plaque excision systems, embolic protection
devices, liquid embolics, embolization coils, flow diversion,
thrombectomy catheters and occlusion balloons.
Financial Highlights
Under the terms of the agreement, Covidien will pay $22.50 in
cash per ev3 share for a total of approximately $2.6 billion, net
of cash acquired. The combination with ev3 will provide an
additional growth platform for Covidien and is expected to be
accretive to both revenue and earnings growth rates.
The transaction, which will take the form of an all-cash tender
offer by a wholly-owned subsidiary of Covidien, followed by a
second-step merger, is subject to customary closing conditions,
including receipt of certain regulatory approvals, and is expected
to be completed by July 31, 2010. The Boards of Directors of
both companies have unanimously approved the transaction. All of
the directors and executive officers of ev3 have confirmed their
intention to tender all shares held by them into the offer, and
certain stockholders affiliated with Warburg, Pincus Equity
Partners LP, holding approximately 24% of ev3’s outstanding common
stock, have entered into agreements with Covidien to tender their
shares. Once the transaction has been completed, Covidien will
report ev3 as part of its Vascular Products line in the Medical
Devices business segment.
Assuming a closing on July 31, 2010, Covidien expects that this
transaction, on a GAAP basis, will dilute 2010 and 2011 earnings
per share. On a Non-GAAP basis, excluding transaction,
restructuring and other costs, Covidien expects this transaction to
dilute fiscal 2010 earnings per share by 5 to 8 cents; however, the
underlying strength of Covidien’s existing businesses is expected
to offset a portion of this dilution. Covidien expects fiscal 2011
Non-GAAP earnings per share to be diluted by approximately 10 to 15
cents, primarily due to higher depreciation/amortization, interest
and income tax expenses.
Covidien intends to finance the transaction through a
combination of cash on hand, commercial paper and a fully committed
bridge facility.
Covidien will hold a conference call and web cast with investors
today at 8:00 a.m. ET to discuss this announcement. Call details
can be found later in this release.
About Covidien
Covidien is a leading global healthcare products company that
creates innovative medical solutions for better patient outcomes
and delivers value through clinical leadership and excellence.
Covidien manufactures, distributes and services a diverse range of
industry-leading product lines in three segments: Medical Devices,
Pharmaceuticals and Medical Supplies. With 2009 revenue of $10.7
billion, Covidien has 42,000 employees worldwide in more than 60
countries, and its products are sold in over 140 countries. Please
visit
www.covidien.com to learn more about our business.
About ev3
Since its founding in 2000, ev3 has been dedicated to developing
breakthrough and clinically proven technologies for the
endovascular treatment of peripheral vascular and neurovascular
diseases. The company offers a comprehensive portfolio of treatment
options, including the primary interventional technologies used
today — plaque excision systems, peripheral angioplasty balloons,
stents, embolic protection devices, liquid embolics, embolization
coils, flow diversion, thrombectomy catheters and occlusion
balloons. More information about the company and its products can
be found at
http://www.ev3.net.
CONFERENCE CALL AND WEBCAST
Covidien will hold a conference call for investors today,
beginning at 8:00 a.m. ET. This call can be accessed three
ways:
- At Covidien’s website:
http://investor.covidien.com - By telephone: For both
“listen-only” participants and those participants who wish to take
part in the question-and-answer portion of the call, the telephone
dial-in number in the U.S. is 800-299-7098. For participants
outside the U.S., the dial-in number is 617-801-9715. The access
code for all callers is 56418613. - Through an audio replay: A
replay of the conference call will be available beginning at 9:00
a.m. on June 2, 2010, and ending at 5:00 p.m. on June 8, 2010. The
dial-in number for U.S. participants is 888-286-8010. For
participants outside the U.S., the replay dial-in number is
617-801-6888. The replay access code for all callers is
46835409.
Supporting materials for the conference call are now available
on the Investor Relations section of Covidien’s website:
http://investor.covidien.com
FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements that are not
historical facts.Covidien and ev3 have identified some of
these forward-looking statements with words like “believe,” “may,”
“could,” “would,” “might,” “possible,” “will,” “should,” “expect,”
“intend,” “plan,” “anticipate,” or “continue,” the negative of
these words, other terms of similar meaning or the use of future
dates.Forward-looking statements in this release include
without limitation statements regarding the expected timing of the
completion of the transaction and statements regarding the effect
of the transaction on Covidien’s business and competitive position,
statements regarding future innovation and market growth and
statements regarding Covidien’s future financial performance and
financial condition. Investors and security holders are cautioned
not to place undue reliance on these forward-looking
statements.Actual results could differ materially from those
currently anticipated due to a number of risks and
uncertainties.Risks and uncertainties that could cause
results to differ from expectations include: uncertainties as to
the timing of the transaction; uncertainties as to how many of
ev3’s stockholders will tender their shares in the offer; the risk
that competing offers will be made; the possibility that various
closing conditions for the transaction may not be satisfied or
waived, including that a governmental entity may prohibit, delay or
refuse to grant approval for the consummation of the transaction;
the effects of disruption from the transaction making it more
difficult to maintain relationships with employees, customers,
vendors and other business partners; the risk that stockholder
litigation in connection with the transaction may result in
significant costs of defense, indemnification and liability; other
business effects, including the effects of industry, economic or
political conditions outside of Covidien’s and ev3’s control;
transaction costs; actual or contingent liabilities; and other
risks and uncertainties discussed in Covidien’s and ev3’s filings
with the U.S. Securities and Exchange Commission, including the
“Risk Factors” sections of Covidien’s and ev3’s most recent annual
report on Form 10-K and subsequent quarterly reports on Form 10-Q,
as well as the tender offer documents to be filed by COV Delaware
Corporation, a wholly-owned subsidiary of Covidien, and the
Solicitation/Recommendation Statement to be filed by
ev3.Neither Covidien nor ev3 undertakes any obligation to
update any forward-looking statements as a result of new
information, future developments or otherwise, except as expressly
required by law.All forward-looking statements in this
announcement are qualified in their entirety by this cautionary
statement.
NON-GAAP Financial Information
This release contains a non-GAAP financial measure. This
non-GAAP financial measure, which is used as a measure of
Covidien’s performance, should be considered in addition to, not as
a substitute for, or superior to, measures of Covidien’s financial
performance prepared in accordance with GAAP. Covidien’s non-GAAP
measures may be defined differently than similar terms used by
other companies, and accordingly, care should be exercised in
understanding how Covidien defines its non-GAAP financial
measures.
Specifically, any one-time charge for transaction costs,
restructuring, and future payment charges are excluded from the
projected earnings per share dilution.
Covidien management uses this non-GAAP financial measure because
it believes it is useful and more meaningful to assess projected
earnings per share dilution excluding the transaction-related
expenses. This non-GAAP financial measure is also used by
Covidien’s management in their financial and operating
decision-making because management believes it reflects the
underlying economics of Covidien’s ongoing business in a manner
that allows meaningful period-to-period comparisons. Such
comparisons may be more meaningful because operating results
presented under GAAP may include, from time to time, items that are
not necessarily relevant to understand Covidien’s business and may,
in some cases, be difficult to forecast accurately for future
periods. Covidien’s management believes that this non-GAAP
financial measure provides useful information to investors and
others in understanding and evaluating Covidien’s current operating
performance and future prospects in the same manner as management
does if they so choose. Non-GAAP financial measures have
limitations, however, because they do not include all items of
income and expense that affect Covidien’s operations. Covidien’s
management compensates for this and other limitations by also
considering Covidien’s financial results as determined in
accordance with GAAP.
IMPORTANT INFORMATION ABOUT THE TENDER OFFER
This release is neither an offer to purchase nor a solicitation
of an offer to sell any securities of ev3 Inc. COV Delaware
Corporation (“Purchaser”), an indirect, wholly-owned subsidiary of
Covidien, has not commenced the tender offer for the shares of ev3
common stock described in this release.
Upon commencement of the tender offer, Purchaser will file with
the SEC a tender offer statement on Schedule TO and related
exhibits, including the offer to purchase, letter of transmittal,
and other related documents. Following commencement of the tender
offer, ev3 will file with the SEC a tender offer
solicitation/recommendation statement on Schedule 14D-9. These
documents will contain important information about Covidien, ev3,
the transaction and other related matters. Investors and security
holders are urged to read each of these documents carefully when
they are available.
Investors and security holders will be able to obtain free
copies of the tender offer statement, the tender offer
solicitation/recommendation statement and other documents filed
with the SEC by Purchaser and ev3 through the web site maintained
by the SEC at
www.sec.gov. In addition, investors and security holders will
be able to obtain free copies of these documents by contacting:
Covidien
Investor Relations
508-452-4650
investor.relations@covidien.com
or
ev3 Inc.
Julie Tracy
Sr. Vice President
Chief Communications Officer
949-680-1375
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