(Updates with VNUS first-quarter earnings details)
DOW JONES NEWSWIRES
Covidien Ltd. (COV) will acquire medical-device maker VNUS
Medical Technologies Inc. (VNUS) for $440 million as it looks to
expand its presence in the vascular market.
Unlike many of its rivals, who are being hurt by
hospital-spending cutbacks, Covidien sells mostly less-expensive
medical products and equipment that won't pressure budgets.
Covidien will pay $29 a share in the all-cash offer, a 36%
premium over VNUS's Thursday closing price. Both companies' shares
were inactive premarket.
The deal is expected to close by June 30; if so it would slighly
cut into earnings for the year ending Sept. 30 excluding
acquisition-related charges.
San-Jose, Calif.-based VNUS makes devices for minimally invasive
treatment of venous reflux disease, a cause of varicose veins that
can result in leg pain, swelling, fatigue and skin ulcers. Its
products include the VNUS Closure system, which uses a
radiofrequency catheter to heat and close diseased veins. In
trials, the system has been shown to be as effective as vein
stripping, a surgical procedure, with fewer side effects and faster
recovery.
Meanwhile, VNUS also reported Friday it swung to a first-quarter
profit of $1.9 million, or 11 cents a share, from a year-earlier
loss of $420,000, or 3 cents a share. Revenue rose 31% to $24.7
million as gross margin rose to 70% from 66.1%.
The company had said in February it expected earnings between
break-even and 1 cent a share and revenue of $22.9 million to $24.1
million.
VNUS Chief Executive Brian Farley said the results
"substantially exceeded our expectations in every aspect of our
business."
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com