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...