Covidien (NYSE: COV) and Aspect Medical Systems, Inc. (NASDAQ: ASPM) today announced that Covidien has reached a definitive agreement to acquire Aspect, a global market leader in brain monitoring technology.
The Boards of Directors of both companies have unanimously approved the transaction, pursuant to which a wholly owned subsidiary of Covidien will pay $12.00 in cash per Aspect share for a total of approximately $210 million, net of cash and short-term investments acquired. The transaction, which will take the form of an all cash tender offer followed by a second-step merger, is subject to customary closing conditions, including receipt of certain regulatory approvals, and is expected to be completed by the end of calendar 2009.
Founded in 1987, Aspect is recognized as a pioneer and global market leader in brain monitoring, with 2008 revenues of $99 million. Aspect’s premier product — Bispectral Index™ (BIS™) technology — became the first clinically proven and commercially available direct measure of the effects of anesthetics and sedatives on the brain. Aspect led the way to develop proprietary technologies that directly measure these effects and ultimately improve the quality and cost effectiveness of patient care. BIS technology is designed to allow medical professionals to reliably gauge the precise amount of anesthetic medication required by each patient, resulting in better overall patient care.
“The acquisition of Aspect will allow Covidien to broaden its product offerings and add a market leading brain monitoring technology to its portfolio,” said Pete Wehrly, President, Respiratory & Monitoring Solutions, Covidien. “Aspect will bring us enhanced clinical expertise, a strong research & development organization and expand our presence in the operating room. The acquisition is consistent with our strategy of expanding into adjacent market segments and will help us achieve our mission of enhancing the quality of life for patients and improving outcomes for our customers.”
“Joining Covidien provides Aspect with the scale and resources to accelerate growth of BIS and other Aspect products, to continue to invest in outcomes research, comparative effectiveness and innovation, and to support the strategy of providing products that are designed to improve patient outcomes,” said Nassib Chamoun, President and Chief Executive Officer, Aspect Medical Systems. “Above all, we are pleased to become part of a company that shares our commitment to evidence-based medicine and the development of products that help clinicians cost-effectively deliver better care.”
Assuming a December 31, 2009, closing, Covidien expects this transaction to dilute fiscal 2010 GAAP earnings per share, primarily due to a one-time charge for restructuring. On a non-GAAP basis, excluding the restructuring charge, the transaction is expected to be slightly dilutive to 2010 earnings per share; however, the underlying strength of Covidien’s existing businesses is expected to offset this dilution. As a result, Covidien does not anticipate this transaction will have a material impact on its fiscal 2010 sales or operating margin outlook.
Once the transaction has been completed, Covidien will report the Aspect business as part of its Oximetry and Monitoring product line in the Medical Devices segment.