Winners in Depth
Blue Sage Capital
STRATEGIC BUYER OF THE YEAR
The Dublin medical device company's aggressive dealmaking netted half a dozen acquisitions in fast-growing categories.
Medical equipment and supply company Covidien plc (NYSE: COV) shone when it came to dealmaking throughout 2012, despite the overall lull in activity engulfing even the most acquisitive middle-market companies. The Dublin-based buyer, with U.S. headquarters in Mansfield, Mass., coupled its extensive research and development (R&D) efforts with aggressive dealmaking, netting half a dozen acquisitions in fast-growing categories.
Covidien achieved this during a year when most strategic buyers were relatively quiet. For example, the maximum tally of deals for a company shopping in the price range of $1.2 billion or less in any sector was about 10, a far cry from the volume we've seen among past winners in this category. Rather than recognizing volume, our award honors Covidien for displaying innovation and aggressiveness.
Over the course of six deals-each squarely in the middle market, below $1.2 billion but above $60 million-Covidien was able to enter a variety of categories at a quicker pace, explains Amy Wendell, Covidien's senior vice president of strategy and business development.
"Our investment in companies with products in the development stage allows us to enter new, fast-growing categories much faster than if we used internal development resources," Wendell says. "On that same note, in the past five years, we also have more than doubled our R&D spending."
While rivals Boston Scientific Corp. (NYSE: BSX) and Sanofi SA (NYSE: SNY) also utilize M&A as a way to catch up with new technology, Covidien is managing to do that and more, spending $1.14 billion over the course of 2012 on acquisition targets and $623 million on R&D.
Covidien opened 2012 with the acquisition of Sunnyvale, Calif.-based Barrx Medical Inc. for $325 million, the largest of its deals.
In May, the company had somewhat of a trifecta, picking up Costa Mesa, Calif.-based Newport Medical Instruments Inc. for $108 million, along with Campbell, Calif.-based nascent hypertension product company Maya Medical for $60 million, and SuperDimension Ltd., headquartered in Herzliya, Israel, for $300 million.
In June, Covidien agreed to buy Jerusalem-based Oridion Systems Ltd. for $310 million, while in July, it acquired MindFrame, an Irvine, Calif.-based maker of clot-removal devices that are used to treat ischemic stroke patients, for $75 million.
The medical device maker continues its dealmaking activity, kicking off 2013 by completing the $100 million acquisition of CNS Therapeutics, folding the business into Mallinckrodt, Covidien's pharmaceuticals unit. CNS is known for developing Gablofen, a maker of pre-filled syringes used to reduce preparation steps for patients receiving treatment for cerebral and spinal spasticity.
In 2013, Covidien plans to remain on the hunt for tuck-in opportunities, Wendell adds.
"We have to look for companies that will continue to help us target unmet therapy needs by delivering innovative products that are economically and clinically viable."
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