- Expands monitoring platform with market-leading technology
- Complements existing sales infrastructure; geographic expansion
- Strong portfolio of clinical research
DUBLIN & TROY, Mich., Jun 16, 2010 (BUSINESS WIRE) --Covidien plc (NYSE: COV) and Somanetics Corporation (NASDAQ: SMTS) today
announced that they have signed a definitive merger agreement under
which Covidien will acquire all of the outstanding shares of Somanetics
Corporation for $25.00 per share in cash, for a total of $250 million,
net of cash acquired. This acquisition is consistent with the Covidien
strategy to expand into adjacencies and invest in product categories
where it can develop a global competitive advantage.
Somanetics is a leader in cerebral and somatic oximetry. The company had
sales of $50 million in 2009 and has approximately 150 employees. Its
INVOS(R) (In-Vivo Optical Spectroscopy) Cerebral/Somatic Oximeter, a
noninvasive patient monitor, continuously measures blood oxygen levels
in the brain and in the body of patients who are at risk for restricted
blood flow so clinicians can detect and correct a variety of threatening
complications. The INVOS System is the only commercially-available
cerebral/somatic oximeter shown to improve patient outcomes.
"The acquisition of Somanetics will allow Covidien to broaden our
product offerings and add another market-leading monitoring technology
to its portfolio," said Pete Wehrly, President, Respiratory & Monitoring
Solutions, Covidien. "The Somanetics product line, which we currently
distribute in Europe, will expand our presence in the operating room.
The acquisition will help us achieve our mission of enhancing the
quality of life and improving patient outcomes."
"We are excited about joining Covidien and enabling Somanetics'
shareholders to realize enhanced value for their investment," said Bruce
Barrett, President and Chief Executive Officer, Somanetics. "We have
enjoyed a strong, long-standing relationship with Covidien as the
exclusive European distribution partner of our INVOS System. Our
proprietary technology ideally complements Covidien's portfolio of
respiratory and monitoring products."
Under the terms of the agreement, Covidien will pay $25.00 in cash per
Somanetics share for a total of approximately $250 million, net of cash
acquired. The combination with Somanetics will broaden Covidien's
product offerings and is expected to be accretive to both revenue and
earnings growth rates over time.
The transaction, which will take the form of an all-cash tender offer by
a wholly-owned subsidiary of Covidien, followed by a second-step merger,
is subject to customary closing conditions, including receipt of certain
regulatory approvals, and is expected to be completed by July 31, 2010.
The Boards of Directors of both companies have unanimously approved the
transaction. All of the directors and executive officers of Somanetics
have confirmed their intention to tender all shares held by them into
the offer. Once the transaction has been completed, Covidien will report
the Somanetics business as part of its Oximetry and Monitoring product
line in the Medical Devices business segment.
Assuming a closing on July 31, 2010, Covidien expects that this
transaction will be dilutive to 2010 and 2011 GAAP earnings per share.
On a Non-GAAP basis, excluding transaction, restructuring and other
costs, the transaction is expected to be neutral to earnings per share
in fiscal 2010 and slightly accretive to fiscal 2011 earnings per share.
Covidien is a leading global healthcare products company that creates
innovative medical solutions for better patient outcomes and delivers
value through clinical leadership and excellence. Covidien manufactures,
distributes and services a diverse range of industry-leading product
lines in three segments: Medical Devices, Pharmaceuticals and Medical
Supplies. With 2009 revenue of $10.7 billion, Covidien has 42,000
employees worldwide in more than 60 countries, and its products are sold
in over 140 countries. Please visit www.covidien.com
to learn more about our business.
Somanetics Corporation develops, manufactures and markets the INVOS(R)
Cerebral/Somatic Oximeter. The INVOS System is the only
commercially-available cerebral/somatic oximeter with labeling for
improved outcomes after surgery in patients above 2.5 kg. The INVOS
System is the clinical reference standard in cerebral/somatic oximetry,
with a 12-year market track record, more than 750 clinical references
and implementation at approximately 800 U.S. hospitals. Somanetics also
develops, manufactures and markets the Vital Sync(TM) System, a device that
integrates data from bedside devices into a single system for enhanced
patient assessment and decision making, data management and data
storage. Somanetics supports its customers through a direct U.S. sales
force and clinical education team. Covidien markets INVOS System
products in Europe, Canada, the Middle East and South Africa and Edwards
Lifesciences represents INVOS System products in Japan. For more
information, visit http://www.somanetics.com/.
This release contains forward-looking statements that are not
historical facts.Covidien and Somanetics have identified some of
these forward-looking statements with words like "believe," "may,"
"could," "would," "might," "possible," "will," "should," "expect,"
"intend," "plan," "anticipate," or "continue," the negative of these
words, other terms of similar meaning or the use of future dates.Forward-looking
statements in this release include without limitation statements
regarding the expected timing of the completion of the transaction and
statements regarding the effect of the transaction on Covidien's
business and competitive position, statements regarding future
innovation and market growth and statements regarding Covidien's future
financial performance and financial condition. Investors and security
holders are cautioned not to place undue reliance on these
forward-looking statements.Actual results could differ
materially from those currently anticipated due to a number of risks and
uncertainties.Risks and uncertainties that could cause results
to differ from expectations include: uncertainties as to the timing of
the transaction; uncertainties as to how many of Somanetics'
stockholders will tender their shares in the offer; the risk that
competing offers will be made; the possibility that various closing
conditions for the transaction may not be satisfied or waived, including
that a governmental entity may prohibit, delay or refuse to grant
approval for the consummation of the transaction; the effects of
disruption from the transaction making it more difficult to maintain
relationships with employees, customers, vendors and other business
partners; the risk that stockholder litigation in connection with the
transaction may result in significant costs of defense, indemnification
and liability; other business effects, including the effects of
industry, economic or political conditions outside of Covidien's and
Somanetics' control; transaction costs; actual or contingent
liabilities; and other risks and uncertainties discussed in Covidien's
and Somanetics' filings with the U.S. Securities and Exchange
Commission, including the "Risk Factors" sections of Covidien's and
Somanetics' most recent annual report on Form 10-K and subsequent
quarterly reports on Form 10-Q, as well as the tender offer documents to
be filed by Covidien DE Corp., a wholly-owned subsidiary of Covidien,
and the Solicitation/Recommendation Statement to be filed by Somanetics.Neither Covidien nor Somanetics undertakes any obligation to update
any forward-looking statements as a result of new information, future
developments or otherwise, except as expressly required by law.All
forward-looking statements in this announcement are qualified in their
entirety by this cautionary statement.
NON-GAAP Financial Information
This release contains a non-GAAP financial measure. This non-GAAP
financial measure, which is used as a measure of Covidien's performance,
should be considered in addition to, not as a substitute for, or
superior to, measures of Covidien's financial performance prepared in
accordance with GAAP. Covidien's non-GAAP measures may be defined
differently than similar terms used by other companies, and accordingly,
care should be exercised in understanding how Covidien defines its
non-GAAP financial measures.
Specifically, any one-time charges for transaction, restructuring and
other costs are excluded from the projected earnings per share dilution.
Covidien management uses this non-GAAP financial measure because it
believes it is useful and more meaningful to assess projected earnings
per share dilution excluding the transaction-related expenses. This
non-GAAP financial measure is also used by Covidien's management in its
financial and operating decision-making because management believes it
reflects the underlying economics of Covidien's ongoing business in a
manner that allows meaningful period-to-period comparisons. Such
comparisons may be more meaningful because operating results presented
under GAAP may include, from time to time, items that are not
necessarily relevant to understand Covidien's business and may, in some
cases, be difficult to forecast accurately for future periods.
Covidien's management believes that this non-GAAP financial measure
provides useful information to investors and others in understanding and
evaluating Covidien's current operating performance and future prospects
in the same manner as management does if they so choose. Non-GAAP
financial measures have limitations, however, because they do not
include all items of income and expense that affect Covidien's
operations. Covidien's management compensates for this and other
limitations by also considering Covidien's financial results as
determined in accordance with GAAP.
IMPORTANT INFORMATION ABOUT THE TENDER OFFER
This release is neither an offer to purchase nor a solicitation of an
offer to sell any securities of Somanetics Corporation. Covidien DE Corp.("Purchaser"), an indirect, wholly-owned subsidiary of Covidien, has
not commenced the tender offer for the shares of Somanetics common stock
described in this release.
Upon commencement of the tender offer, Purchaser will file with the SEC
a tender offer statement on Schedule TO and related exhibits, including
the offer to purchase, letter of transmittal, and other related
documents. Following commencement of the tender offer, Somanetics will
file with the SEC a tender offer solicitation/recommendation statement
on Schedule 14D-9. These documents will contain important information
about Covidien, Somanetics, the transaction and other related matters.
Investors and security holders are urged to read each of these documents
carefully when they are available.
Investors and security holders will be able to obtain free copies of the
tender offer statement, the tender offer solicitation/recommendation
statement and other documents filed with the SEC by Purchaser and
Somanetics through the web site maintained by the SEC at www.sec.gov.
In addition, investors and security holders will be able to obtain free
copies of these documents by contacting:
Eric Kraus, 508-261-8305
Senior Vice President
Coleman Lannum, CFA, 508-452-4343
Bruce Farmer, 508-452-4372
Brian Nameth, 508-452-4363
Bill Iacona, 248-244-1423
Chief Financial Officer