Covidien Buys Surgical Tool Firm

Health products giant Covidien plc announced that it will spend $64 million to acquire Power Medical Interventions Inc., a Langhorne, PA-based maker of high-tech surgical tools.

Covidien will pay $2.08 in cash for each share of Power Medical’s common stock. The total cost of the transaction, which was unanimously approved by both companies’ boards, will be approximately $64 million when the assumption of Power Medical’s debt by Covidien is included. The deal is expected to be completed by September 25.

Founded in 1999, Power Medical Interventions’ products include the surgical cutting and stapling products SurgAssist and wireless Intelligent Surgical Instruments. In addition to its Pennsylvania headquarters, Power Medical also has offices in Connecticut, Germany, France and Japan. The company’s revenue totaled $9 million last year.

“By combining these technological assets with our global infrastructure, we will be delivering differentiated solutions to our customers,” says Scott Flora, president of Covidien’s surgical devices division. “As a pioneer in surgical stapling, we are committed to providing health care technology that enables advanced surgical techniques and improves patient outcomes.”

Power Medical went public in October 2007, but hit the skids last year as the economy worsened. The company was delisted from the Nasdaq Stock Exchange in May after its stockholders’ total equity fell below the exchange’s minimum requirement.

Covidien said it does not expect the cost of the acquisition to impact its fiscal 2009 results but it could dilute earnings next year. Power Medical’s products will be reported as part of the Endomechanical product line in Covidien’s medical devices division.

The purchase of Power Medical is Covidien’s second acquisition in recent months. In May, the company bought San Jose-based medical device firm VNUS Medical Technologies Inc. for $440 million.