Covidien (NYSE: COV) and Aspect Medical Systems, Inc. (NASDAQ:
ASPM) today announced that Covidien has reached a definitive
agreement to acquire Aspect, a global market leader in brain
monitoring technology.
The Boards of Directors of both companies have unanimously
approved the transaction, pursuant to which a wholly owned
subsidiary of Covidien will pay $12.00 in cash per Aspect share for
a total of approximately $210 million, net of cash and short-term
investments acquired. The transaction, which will take the form of
an all cash tender offer 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
the end of calendar 2009.
Founded in 1987, Aspect is recognized as a pioneer and global
market leader in brain monitoring, with 2008 revenues of $99
million. Aspect’s premier product — Bispectral Index™ (BIS™)
technology — became the first clinically proven and commercially
available direct measure of the effects of anesthetics and
sedatives on the brain. Aspect led the way to develop proprietary
technologies that directly measure these effects and ultimately
improve the quality and cost effectiveness of patient care. BIS
technology is designed to allow medical professionals to reliably
gauge the precise amount of anesthetic medication required by each
patient, resulting in better overall patient care.
“The acquisition of Aspect will allow Covidien to broaden its
product offerings and add a market leading brain monitoring
technology to its portfolio,” said Pete Wehrly, President,
Respiratory & Monitoring Solutions, Covidien. “Aspect will
bring us enhanced clinical expertise, a strong research &
development organization and expand our presence in the operating
room. The acquisition is consistent with our strategy of expanding
into adjacent market segments and will help us achieve our mission
of enhancing the quality of life for patients and improving
outcomes for our customers.”
“Joining Covidien provides Aspect with the scale and resources
to accelerate growth of BIS and other Aspect products, to continue
to invest in outcomes research, comparative effectiveness and
innovation, and to support the strategy of providing products that
are designed to improve patient outcomes,” said Nassib Chamoun,
President and Chief Executive Officer, Aspect Medical Systems.
“Above all, we are pleased to become part of a company that shares
our commitment to evidence-based medicine and the development of
products that help clinicians cost-effectively deliver better
care.”
Assuming a December 31, 2009, closing, Covidien expects this
transaction to dilute fiscal 2010 GAAP earnings per share,
primarily due to a one-time charge for restructuring. On a non-GAAP
basis, excluding the restructuring charge, the transaction is
expected to be slightly dilutive to 2010 earnings per share;
however, the underlying strength of Covidien’s existing businesses
is expected to offset this dilution. As a result, Covidien does not
anticipate this transaction will have a material impact on its
fiscal 2010 sales or operating margin outlook.
Once the transaction has been completed, Covidien will report
the Aspect business as part of its Oximetry and Monitoring product
line in the Medical Devices segment.
ABOUT COVIDIEN
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 2008 revenue of $10
billion, Covidien has more than 41,000 employees worldwide in 59
countries, and its products are sold in over 140 countries. Please
visit www.covidien.com to learn more about our business.
ABOUT ASPECT MEDICAL SYSTEMS, INC.
Aspect Medical Systems, Inc. is a global market leader in brain
monitoring technology. To date, the Company's Bispectral Index
(BIS) technology has been used to assess approximately 34 million
patients and has been the subject of more than 3,300 published
articles and abstracts. BIS technology is installed in
approximately 78 percent of hospitals listed in the July 2009 U.S.
News and World Report ranking of America's Best Hospitals and in
approximately 74 percent of all U.S. operating rooms. In the last
twelve months, BIS technology was used in approximately 19 percent
of all U.S. surgical procedures requiring general anesthesia or
deep sedation. Aspect Medical Systems has OEM agreements with nine
leading manufacturers of patient monitoring systems. For more
information, visit Aspect's Web site at
http://www.aspectmedical.com.
FORWARD-LOOKING STATEMENTS
Any statements contained in this communication that do not
describe historical facts may constitute forward-looking statements
as that term is defined in the Private Securities Litigation Reform
Act of 1995. This release contains forward-looking information
about Covidien’s proposed acquisition of Aspect Medical Systems,
Inc., the timing of the anticipated transaction, the potential
benefits of the anticipated transaction, Aspect’s clinical trials,
products and product candidates and the potential benefits of such
products and product candidates, and expected dilutive effect. Any
forward-looking statements contained herein are based on Covidien’s
and Aspect’s management’s current beliefs and expectations, but are
subject to a number of risks, uncertainties and changes in
circumstances, which may cause actual results or actions to differ
materially from what is expressed or implied by these statements.
The factors that could cause actual future results to differ
materially from current expectations include, but are not limited
to, the satisfaction of conditions to closing the agreement; the
ability to successfully integrate Aspect’s operations and programs
with Covidien’s and the time and resources required to do so, the
uncertainties inherent in commercial, research and development
activities, decisions by regulatory authorities regarding whether
and when to approve any applications for such product candidates
and other matters that could affect the availability or commercial
potential of such product candidates; and competitive developments.
These and other factors are identified and described in more detail
in Covidien’s and Aspect’s filings with the SEC. We caution
investors not to place undue reliance on the forward-looking
statements contained in this press release. We disclaim any
obligation to update these forward-looking statements other than as
required by law.
NON-GAAP Financial Information
This release contains a non-GAAP financial measure. This
non-GAAP financial measure, which is used 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. A reconciliation of
this non-GAAP financial measure to GAAP is provided in the text of
this release. 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 charge for restructuring is excluded
from the projected earnings per share dilution.
Covidien management uses this non-GAAP financial measure to gain
an understanding of its comparative operating performance (when
comparing such results with previous periods or forecasts) and
future prospects. This non-GAAP financial measure is also used by
Covidien’s management in their 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 press release is neither an offer to purchase nor a
solicitation of an offer to sell shares of Aspect. Transformer
Delaware Corp. (the “Merger Sub”), an indirect, wholly-owned
subsidiary of Covidien, has not commenced the tender offer for the
shares of Aspect stock described in this press release.
Upon commencement of the tender offer, the Merger Sub 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, Aspect will file with the SEC a tender offer
solicitation/recommendation statement on Schedule 14D-9. These
documents will contain important information about Covidien,
Aspect, 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 the Merger Sub and Aspect 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:
Covidien Investor Relations 508-452-4650
investor.relations@covidien.com
or Aspect Medical Systems Investor Relations
1-617-559-7000
bis_info@aspectms.com
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