Covidien (NYSE:COV) said today that it will likely divest some of its vascular therapies business to satisfy U.S. anti-trust regulators ahead of its proposed, $43 billion merger with Medtronic (NYSE:MDT).*
The divestitures prompted Mansfield, Mass.-based Covidien to log a pre-tax impairment charge of $90 million to $125 million with its 4th-quarter results, according to a regulatory filing.
"On Oct. 20, 2014, Covidien plc’s management concluded that a non-cash charge was required for the impairment of non-amortizable in-process research and development projects associated with its vascular therapies product line," according to the filing. "This determination reflects the probability that the in-process technology will be sold in connection with the acquisition of Covidien by Medtronic."
The vascular therapies business includes devices to treat peripheral artery disease, chronic venous insufficiency and neurological conditions including stroke and aneurysm.
Earlier today Medtronic said it hopes to keep its debt out of junk bond status after it borrows $16 billion to fund the acquisition, medtech’s largest ever.
The Fridley, Minn.-based medical device company had planned to use about $13.5 billion in overseas cash for the merger, but new U.S. Treasury rules instituted last month prompted it to change the structure of the deal.
*Correction, Oct. 24, 2014: This article originally stated that Covidien plans to sell its entire vascular therapies unit. Only some of the vascular therapies are likely to be sold. Return to the corrected sentence.
