Covidien Buying Given Imaging for $860 Million

Sale of camera-in-a-capsule maker expected to be consummated by March 31.

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The Irish medical device maker Covidien PLC will acquire the Israeli camera-in-a-pill maker Given Imaging for $30 a share in cash, or a total of $860 million, the companies said on Sunday.

The acquisition came after three units of Nochi Dankner’s IDB group − Elron Electronic Industries, Discount Investment Corporation and RDC Rafael Development Corporation − agreed Saturday to sell their stakes without revealing the name of the buyer.

Covidien will be making an offer to buy all of Given’s shares, including those traded on the Tel Aviv Stock Exchange and the Nasdaq, which will lead to the delisting of the stock when the transaction closes at the end of March.

Shares of Given Imaging, whose technology is used to visualize, diagnose and monitor the digestive system, jumped more than 21% to close at 99.30 shekels in Tel Aviv Stock Exchange trading on Sunday. The company’s shares closed at $23.65 on Nasdaq on Friday.

“We believe GI [gastrointestinal] is one of the most attractive specialty procedure areas. Acquiring Given will enable Covidien to significantly expand its presence in a $3 billion GI market,” said Bryan Hanson, group president for medical devices and the United States at Covidien.

“After thoroughly evaluating our strategic options we determined that this transaction is in the best interests of Given Imaging, its shareholders and employees and provides unique benefits to patients globally,” said Homi Shamir, Given Imaging’s CEO.

Given was formed in 1998 and won its first approval for its miniature camera three years later. Its technology is based on technology used for guided missiles, which one of the two founders, Gabi Iddan, worked on at Rafael.

The boards of both companies have approved the deal, as have the boards of Given’s major shareholders, who own 44% of Given’s outstanding shares.

For IDB, the sale raises badly needed cash as it struggles with billions of shekels in debt. The sale represents a victory for Dankner, who last February rejected an offer for Given shares of $15 apiece. 

The nex generation of Given Imaging’s PillCam capsules are expected to boost sales.

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