Healthcare products maker Covidien PLC (COV) on Monday announced that it is acquiring brain monitoring technology company Aspect Medical Systems Inc. (ASPM) in a deal worth $210 million in cash.
Dublin, Ireland-based Covidien said it will pay $12 per share for ASPM, which represents a 56% premium over Aspect's Friday closing price of $7.67.
Aspect Medical, which is based in Norwood, Massachusetts, makes an anesthesia monitoring system named BIS system. BIS helps clinicians monitor a patient's consciousness, as well as determine the amount of anesthesia needed during operations and other procedures.
The deal, which is expected to close by the end of the year, is expected to negatively impact Covidien's earnings per share in 2010.
Covidien shares rose 73 cents, or +1.76%, in morning trading Monday.
The Bottom Line
We had removed shares of COV from our ''recommended'' list last Oct.6, when the shares traded at $52.19. The company has a dividend yield of 1.74%, based on Friday’s closing stock price of $41.36. The stock has technical support in the $35 price area. If the shares can firm up, we see overhead resistance around the $45 price levels. We would remain on the sidelines for now.
