Covidien Announces Definitive Agreement to Acquire BÂRRX Medical, Inc.

11/21/11
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Acquisition to accelerate the worldwide adoption of endoscopic therapy for patients with Barrett’s esophagus.


DUBLIN--November 21, 2011--Covidien (NYSE: COV), a leading global provider of healthcare products and a world leader in advanced energy-based devices, today announced a definitive agreement to acquire BÂRRX Medical, Inc. BÂRRX is the leader in treatment of Barrett’s esophagus syndrome using bipolar radiofrequency (RF) ablation devices.

Covidien will acquire all of the outstanding capital stock of BÂRRX, a private company, for approximately $325 million, with future earn out payments possible based on achievement of specific milestones. The transaction, subject to customary closing conditions, including receipt of certain regulatory approvals, is expected to be completed by January 31, 2012.

This acquisition is consistent with Covidien’s strategy to expand into adjacencies and invest in product categories where it can develop a global competitive advantage. The acquisition of BÂRRX will expand Covidien’s ability to treat gastrointestinal diseases, such as Barrett’s esophagus.

Barrett’s esophagus syndrome is a precancerous condition of the lining of the esophagus, often a precursor to esophageal cancer and often the result of gastro esophageal reflux disease. Left untreated, Barrett’s can lead to esophageal adenocarcinoma, a cancer with less than 15% five-year survival. BÂRRX’s HALO90, HALO90 ULTRA and HALO360+ ablation catheters, driven by the HALOFLEX ablation system, provide a uniform and controlled ablation effect that removes diseased tissue and allows re-growth of normal cells.

“BÂRRX Medical products and technology complement our current portfolio of energy-based products and will broaden our presence in the global gastrointestinal market,” said Bryan Hanson, Group President, Surgical Solutions. ”At the same time, patients will benefit from advances in RF technologies that will change the standard of care for esophageal diseases from invasive surgery to therapeutic intervention. Covidien offers advantages to BÂRRX Medical that support its mission in long-term growth and value to patients. We expect to leverage BÂRRX technology and capabilities as a platform to accelerate global expansion.”

“We are extremely pleased that Covidien has elected to acquire BÂRRX, as this should allow us to accelerate the worldwide adoption of our evidence-based endoscopic therapy for patients with Barrett’s esophagus,” said Greg Barrett, President and CEO, BÂRRX Medical. “Dozens of clinical trials and over 65 peer-reviewed publications have demonstrated the safety and effectiveness of our devices for treating esophageal disease, and over 90,000 procedures have been performed. We look forward to this acquisition to enable the clinical trial evaluation of the HALO system in other portions of the gastrointestinal tract as well.”

Assuming a January 2012 closing, Covidien does not expect this transaction to have a material impact on its fiscal 2012 sales, operating margin or earnings per share.

Once the transaction has been completed, Covidien will report the BÂRRX Medical business as part of its Energy product line in the Medical Devices segment.
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