Covidien (NYSE:COV) continued its buying spree with a deal to acquire respiratory and patient monitoring device maker Oridion (SWF:ORIDN) for $300 million in cash.
Covidien agreed to pay $23 per share for the Israeli company, which it plans to fold into its oximetry & monitoring portfolio. The deal is expected to close during the 2nd quarter.
The news sent ORIDN shares skyrocketing 70.4% to about $22.25 (SFr.20.45) on the Swiss stock exchange as of about 9:45 a.m. today. COV shares were down 0.6% to $53.52.
It’s quite a comeback for Oridion, which recently overcame some manufacturing hurdles that saw its entire product line blocked in the U.S.
The FDA banned Oridion from importing any devices into the U.S. after the med-tech maker failed to fix violations at a Jerusalem plant. Shares fell 39% on news of the ban, from $11.00 to $6.65 at market opening Dec. 27.
The federal watchdog agency lifted most of the ban earlier this year, narrowing the prohibition to just 2 Oridion products, specifically the Infant/Neonatal FilterLine H Set and Infant/Neonatal VitaLineTM H Set line.
The FDA action came after nearly 6 months of warnings from the agency. Oridion stepped into the federal watchdog agency’s spotlight in June when an investigation was launched after Philips (NYSE:PHG) recalled 8 lots of infant and neonatal carbon dioxide sampling lines manufactured by Oridion on concerns that they may contain hair-like plastic strands that infants could inhale.
Oridion also markets the Microstream capnography monitors and modules and the etCO2 breathing sampling lines that monitor ventilation.
"The acquisition of Oridion Systems adds a key monitoring technology to the Covidien portfolio," respiratory & monitoring systems president Robert White said in prepared remarks. "Oridion’s products and etCO2 technology are excellent complements to the company’s current portfolio of pulse oximeters and monitoring products, enabling us to offer a complete portfolio of solutions to monitor respiratory function for patients around the world."
Covidien has embarked on an M&A spree in recent months ,inking deals to acquire Newport Medical Instruments for $108 million and superDimension for about $300 million plus possible earnouts in March alone.
The Mansfield, Mass.-based med-tech titan said early last month that it launched 4 new research & development centers across the globe and hopes to release more than 50 new products over the next 2 years, investing more than $40 million in new centers that add 50 new product development labs.
The device maker recently posted a strong 1st quarter with record adjusted gross margins of 58.8% for the 3 months ended Dec. 24, 2011. Covidien also upped its 2012 fiscal guidance, forecasting 3% to 5% sales growth. Its previous guidance was about a point lower.
Oridion posted profits of $6.4 million, or 46 cents per share, on sales of $64.5 million during 2011. That compares with profits of $7.7 million, or 57 cents per share, on sales of $54.2 million during 2010.
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