Covidien (NYSE:COV) said it agreed to sell its Confluent Surgical line of surgical sealants and shields to Integra LifeSciences (NSDQ:IART) for up to $265 million.
Covidien acquired Confluent for $245 million in 2006, when Mansfield, Mass.-based Covidien was still known as the U.S. Surgical division of Tyco International. The divestiture, slated to close by march 31, 2014, is aimed at honing the focus on "global strategic priorities," medical devices & U.S. president Bryan Hanson said in prepared remarks.
"Based on Integra’s presence in neurosurgery and spine surgery combined with a strong portfolio of clinical evidence, we believe these products will thrive under Integra’s ownership. We express our sincere gratitude to our dedicated employees and the clinicians who have partnered with us throughout the years," Hanson said.
The deal calls for Plainsboro Township, N.J.-based Integra to pay $235 million in cash and another $30 million "contingent upon the achievement of certain performance measures related to the transition of the Confluent Surgical business to Integra," according to a press release. Confluent threw off roughly $65 million in sales during fiscal 2012, according to the release.
Covidien said it expects the deal to be dilutive by "several cents" to its fiscal 2014 earnings per share, offset by "the underlying strength of Covidien’s existing businesses."
"As a result, Covidien does not anticipate this transaction will have a material impact on its fiscal 2014 outlook," according to the release.
Serial inventor and entrepreneur Amar Sawhney founded Confluent Surgical in 1998, invented the technology behind flagship DuraSeal in the early 2000s. Confluent, which Sawhney launched with a $1 million seed round in 1998, first started clinical trials on a dural sealant in 2002, shortly after raising another $20 million in a Series B round.