Covidien continues to peck away at the smorgasbord of merger and acquisitions with its latest deal, a $64 million buyout of Power Medical Interventions Inc.
The Mansfield-based medical device colossus paid $2.08 per share and assumed all outstanding debts from the Langhorn, Pa.-based company, which makes computer-assisted, power-actuated surgical cutting and stapling products. The all-cash deal is expected to close Sept. 25.
Covidien paid about four times the 58-cent price Power Medical Interventions shares were fetching July 28. PMI posted a $42 million loss in 2008, on about $9 million in revenues. It has about $15 million in current assets, including just under $5 million in cash.
The company has had a problem keeping up with its substantial cash burn rate, according to its most recent quarterly report.
Analysts said the deal could be a boon for Covidien, as it adds Power Medical’s lines to its already well-stocked portfolio of suturing products. Rick Wise, an analyst with Leerink Swann, called the move “small, but incrementally positive,” in an email to clients, citing Power Medical’s 2008 licensing deal with Intuitive Surgical as validation of the company’s technology.
Wise added that Covidien is setting itself up nicely for future sales growth with this acquisition, as well as with its recent $440 million buyout of San Jose, Calif.-based VNUS Medical Technologies Inc. and its acquisition of Bacchus Vascular.
Interestingly, the acquisition will also benefit Covidien competitor Boston Scientific Corp., which owns a roughly 13 percent stake in Power Medical Interventions. According to its most recent proxy statement, the Natick-based company will net nearly $5 million from the deal.