TEL AVIV, Dec 8 (Reuters) - Medical device maker Covidien PLC will acquire Israeli camera-in-a-pill maker Given Imaging for $30.00 per share in cash, or a total of $860 million, the companies said on Sunday.
Given Imaging has developed technology for visualising, diagnosing and monitoring the digestive system, including its PillCam, a swallowed capsule endoscope. Its shares closed at $23.65 on Nasdaq on Friday.
"We believe GI (gastrointestinal) is one of the most attractive specialty procedure areas. Acquiring Given will enable Covidien to significantly expand its presence in a $3 billion GI market," said Bryan Hanson, group president for medical devices and the United States at Covidien.
"Adding Given's portfolio of diagnostics to our portfolio accelerates Covidien's strategy of providing physicians with products that support the patient along the care continuum from diagnosis to treatment."
The combination of Covidien's global presence and Given Imaging's innovative capabilities has the potential to transform this market, said Homi Shamir, chief executive of Given Imaging.
The transaction is expected to be completed by March 31. The boards of directors of both companies have approved the deal, and the boards of Given's major shareholders, who own 44 percent of Given's outstanding shares, have approved voting in favour of the transaction.
On Saturday, three units of Israel's IDB Group - Elron Electronic Industries, Discount Investment Corp and RDC Rafael Development Corp - agreed to sell their stakes in Given Imaging.
Covidien intends to finance the transaction through cash on hand and will report Given Imaging within the medical devices business segment. Covidien expects Given Imaging will add between $40 million and $50 million per quarter in incremental revenue to the medical devices segment.
On a GAAP basis, the transaction is expected to be dilutive to operating margin and earnings per share in fiscal 2014. On an adjusted basis, excluding one-time items and transaction costs, management expects the transaction to be neutral to both operating margin and EPS in fiscal 2014.
The transaction is expected to be accretive to operating margin and EPS both on a U.S. GAAP and on an adjusted basis in fiscal 2015 and beyond.
Covidien said it is not changing any of its guidance as a result of this transaction.