Covidien buys VNUS Medical for $440m.

Covidien has inked a deal to purchase VNUS Medical Technologies Inc., a San Jose, Calif.-based firm that manufactures devices for the minimally invasive treatment of venous reflux disease, for approximately $440 million.

VNUS had 2008 revenues of $101 million. Both companies' boards unanimously approved the move. Covidien will pay $29 in cash for each share of VNUS stock--a 36 percent premium compared to the closing price of the stock on the day the deal was announced. The deal is expected to close by the end of June.

"The acquisition of VNUS will allow Covidien to expand its presence in the vascular market and is in line with our strategy of becoming a leading partner with vascular surgeons and interventional radiologists," said Joe Almeida, president of Covidien's Medical Devices division. "The VNUS product line will be an important addition to our innovative portfolio of vascular intervention products."

Brian Farley, president and CEO of VNUS, said the merger would help his company gain access to greater global resources.

Venous reflux disease is an underlying cause of varicose veins that can result in symptoms including leg pain, swelling, fatigue and skin ulcers. VNUS' primary product is the VNUS Closure system, which uses a disposable radiofrequency catheter that controllably heats and closes diseased veins. According to the company, a randomized clinical trial proved the system was as effective as vein stripping, an open surgical procedure that has been the standard of care for treatment for venous reflux disease. VNUS claims its device offers fewer side effects and faster recovery.

The Closure system consists of a proprietary radiofrequency (RF) generator and proprietary disposable endovenous catheters and devices to treat diseased veins through the application of temperature-controlled RF energy.

Once the transaction has been completed, the VNUS business will be part of Covidien's Vascular product line in the medical devices segment. Covidien, based in Dublin, Ireland (U.S. headquarters are in Mansfield, Mass.), has product lines in four segments: medical devices, imaging solutions, pharmaceutical products and medical supplies.