UPDATE: Covidien completes Aspect Medical Systems acquisition

November 9, 2009 by MassDevice staff

The medical device monolith acquires the Norwood, Mass.-based brain monitoring equipment maker for $210 million.

Covidien completed its $210 million acquisition of Aspect Medical Systems Inc.

Mansfield, Mass.-based Covidien paid $12 per share for Norwood, Mass.-based Aspect Medical, which makes brain monitoring equipment that measures the effects of anesthesia and sedation. The company posted second-quarter sales of $24.9 million, down slightly from $25.2 million during the same period last year.

And although net income plummeted from $119 million during the 2008 second quarter to $307,000 during the three months ended July 4, operating margins improved to 2.5 percent, compared with -3.8 percent on a nearly million-dollar loss during Q2 2008.

Covidien paid a nearly 57 percent premium over Aspect Medical's $7.67 share price as of market close Sept. 25, when the deal was announced. The company said it will fold Aspect into its oximetry and monitoring product line under the umbrella of its medical devices segment.

In an email to investors Rick Wise, an analyst at the investment bank Leerink Swann called the acquisition a "tuck in" transaction for Covidien. Wise said the deal was similar in nature to the recent "small technology purchase deals," of companies like VNUS, Bacchus Medical and Power Medical. These deals, he said, both bolstered Covidien's product lines and would assist in fattening the company's bottom line in the near future. In particular, Wise said that Aspect would help shore up the company's respiratory business, which is off some 14 percent from 2008, according to the analyst.