Covidien Announces Purchase of ev3

Covidien PLC, maker of drugs and medical devices, announced that it will buy ev3 for $2.6 billion, a 19% premium of Friday’s closing price, according to the Associated Press.

Ev3 manufactures a number of endovascular devices used by physicians during certain types of endovascular surgeries.  Typically, a small incision is made, and the device is placed inside of a major blood vessel where it is manipulated by surgeons.

 Dublin based Covidien plans funding the$22.50 per share purchase price through financing and cash, which will reduce earnings per share by 5-8% this year, according to company officials.

The deal, which is expected to be completed by July 31, was approved by both boards; 24% of ev3 investors are expected to vote in favor of the transaction.

Analysts are applauding the sale, since there is very little overlap among the devices each company distributes.

In mid-day trading Tuesday, Ev3’s shares rose 17.5% to $22.23.  The company expects  approval for its Pipeline Embolization Device in 2011.  The device will be used as a way to  divert blood away from aneurysms in the brain during surgical procedures.

Ev3 is expecting revenue of $520-$530 this year, while Covidien estimates receiving $11 billion this current fiscal year, which ends in September.