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Covidien closes tender offer for Somanetics

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COV, SMTS logos

Covidien plc (NYSE:COV) closed its $25-per-share tender offer for Somanetics Corp. (NSDQ:SMTS), saying it can now own about 80 percent of the Troy, Mich.-based pulse oximetry maker.

The Mansfield, Mass.-based medical products conglomerate agreed to pay $250 million for Somanetics in June as part of its ongoing strategy to bolster businesses it thinks are poised to grow and jettison others that aren’t deemed a good fit.

José Almeida, president of the company’s medical devices division, told MassDevice early this year that the company would seek “adjacencies” in its acquisitions. Citing last year’s $210 million buyout of Aspect Medical Systems, Almeida said expanding Covidien‘s oximetry footprint is one facet of the strategy.

"Our respiratory and monitoring solutions business unit is the market leader in oximetry today, in what we call the SPO2 monitors," he said. "So for us the natural adjacency for that business was to get into other monitoring parameters that allow us to get our foot in the operating room."

Covidien said about 9.6 million shares were tendered, not including another 580,000 that were guaranteed delivery. At $25 per share, that works out to about $254.1 million.

When the deal was announced, Pete Wehrly, president of Covidien’s respiratory and monitoring solutions business, said that the Somanetics technology, which Covidien already distributes in Europe, gives his company another foot in the OR. Somanetics, which employs about 150 workers and posted sales of $50 million last year, makes equipment to monitor blood oxygen levels in the brain and body of patients at risk for restricted blood flow.

Since the Aspect Medical deal closed late last year, Covidien has sold off a pair of operations (its radiopharmacy and specialty chemical businesses) while acquiring others. Earlier this month it announced plans to spend $2.6 billion on ev3 Inc. (NSDQ:EVVV) in a move to pad out its peripheral vascular offering; in March, the company bought Orthofix International NV’s (NSDQ:OFIX) vascular compression business for $19 million.

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