Covidien Shells Out $860M for Israeli Medical Co.

Medical supply manufacturer Covidien agreed to acquire Israeli medical imaging provider Given Imaging Ltd. for $860 million in cash, the companies said Monday.

Covidien wants to expand to provide equipment for gastrointestinal issues, making Given an attractive target, the company said. The Israeli company makes PillCam, a capsule-shaped camera unit that patients can swallow, which then records medical data as it passes through the digestive tract, making gastric endoscopy much faster and easier.

“We believe GI is one of the most attractive specialty procedure areas," said Bryan Hanson, Covidien medical devices and U.S. group president. "Acquiring Given will enable Covidien to significantly expand its presence in a $3 billion GI market."

Covidien estimated that the acquisition will add between $40 million and $50 million in revenue per quarter to its medical device business.

Covidien said that the deal will likely close by the end of the first quarter, assuming regulatory approval. Both company boards signed off on the deal, as well as the boards of principal shareholders Discount Investment Corp., Elron and Rdc, who own 44 percent of Given's outstanding shares.

Given launched in 2001 and specializes mostly in gastrointestinal devices, according to the company. It makes several capsule-shaped monitoring devices, manometry tools and other related technology. The company has subsidiaries throughout the world, including the U.S., Europe, Hong Kong and Brazil.

"The combination of Covidien’s established global presence and Given Imaging’s innovative capabilities has the potential to transform this market,” said Given CEO Homi Shamir in a statement.

Covidien has been known to snap up specialty medical companies to broaden its capabilities. Last September, Covidien PLC unit Mallinckrodt LLC agreed to buy CNS Therapeutics for $100 million, a company that develops and commercializes products for site-specific administration to the central nervous system to treat neurological disorders.

The gastric medicine market has had some big moves recently. Last month, North Carolina-based Salix Pharmaceuticals Ltd. struck a $2.6 billion merger deal to gobble up the gastroenterology-focused drug company Santarus Inc. to help solidify Salix's position in the niche market.

Given Imaging is represented by David Fox, Daniel Wolf, Yi Claire Sheng, Scott Price, Mark Kovner and Daniel Tavakoli of Kirkland & Ellis LLP.

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