Medtronic Gains US and EU Conditional Approval for $43 Billion Acquisition of Covidien

On Nov. 26, 2014, Medtronic announced that it had received clearance from the US Federal Trade Commission to acquire Covidien. The agreement includes a commitment to divest certain assets related to Covidien’s drug-coated balloon catheter product. Earlier in the month, Spectranetics announced that it had reached an agreement to acquire Covidien’s drug-coated angioplasty balloon platform, Stellarex, for $30 million.

Two days following US approval of Medtronic’s acquisition of Covidien, the European Commission has conditionally cleared the transaction. The approval is conditional on Medtronic’s commitment to divest Covidien’s drug-coated balloon business.

The acquisition will bring together two companies that have been developing drug-coated balloons for the treatment of peripheral artery disease. Medtronic’s product, IN.PACT, has been tested in 29 clinical trials covering 4500 patients and 100 sites with the program testing de novo lesions, in-stent restenosis, BTK lesions, and combination therapies of debulking plus DEB. The acquisition will allow Medtronic to benefit from Covidien’s resources, while eliminating the competition.

“There are few competitors currently active in this market and they exert limited competitive pressure on the market leader, Medtronic. It is likely that Covidien would have constrained Medtronic in the near future, in view of the promising first clinical trials' results of Stellarex, its drug coated balloon in development. The acquisition, as initially notified, would therefore have eliminated a credible competitor and would likely have reduced innovation in this area,” the European Commission stated in a press release.

According to Reuters, Medtronic has agreed to pay $43 billion for the acquisition of Covidien. Pending regulatory clearances, the transaction is expected to close in early 2015.

Source: European Commission