Covidien Buys Given To Build GI Business Base In Biggest Israeli Medtech Deal

Three years ago, Medtronic Minimally Invasive Therapies signaled its intention to build a gastrointestinal (GI) device business with its acquisition of Barrx Medical and its esophageal ablation technology for Barrett’s esophagus for $325 million up front (and now more than $409 million with milestones, around 10 times revenue). [See Deal] (See Also see "Covidien Still Hungry For GI After Barrx Buy" - In Vivo, 27 December, 2011..) Since then, the industry has been waiting for Covidien to follow through on its strategy to expand its presence in the $3 billion GI market, and that next step came with the company’s recent $860 million acquisition of publicly traded Given Imaging Ltd.[See Deal] Given Imaging pioneered the capsule endoscopy diagnostic market with its innovative camera-in-a-pill, the PillCam − a vitamin-sized, disposable camera system that is swallowed to wirelessly capture endoscopic images of the GI system. (See Also see "Given Imaging: A Capsule View of GI Diagnostics' Future" - In Vivo, 1 May, 2002..) In acquiring Given, Covidien continued to tap into Israel as a source of medtech innovation, following its previous acquisitions of Israeli-based superDimension Ltd. and Oridion Systems. [See Deal][See Deal] Indeed, for all of the device start-ups that have emerged from Israel, that country’s medtech sector has been criticized for not producing a blockbuster deal. This deal answers those critics, amounting to the largest Israeli medtech acquisition.

The $30 per share that Covidien paid for Given represents a 27% premium over its recent stock price and the total price tag was roughly five times its $180 million in annual sales. “Covidien really likes the gastrointestinal space and they’ve been looking to broaden the portfolio,” says Richard Newitter, medical device analyst at Leerink Swann. “This is very Covidien-like, to go after the market-leading technologies and innovative or promising growth areas where they believe they will have the ability to drive market share over time.” Bryan Hanson, Covidien’s group president of medical devices, in a statement said the addition of Given’s technology will extend the company’s GI pipeline from diagnostics to treatment