Covidien's Still Hungry

Nobody is going to accuse the management at Covidien (NYSE:COV), a diversified medical technology company, of being slow to make any changes. It was only two weeks ago that the company announced that it was entering the peripheral and neurovascular intervention markets by buying ev3 and largely exiting parts of the respiratory care market with a divestiture. 

Now the company is at it again, announcing Wednesday morning that it was acquiring small medical device maker Somanetics (Nasdaq:SMTS) for almost $300 million in cash. That deal represents a 32% premium to the closing price prior to the deal, and a valuation of nearly six times on a trailing price-to-sales basis. Given that growing small-cap medical technology companies generally trade for between four and six times trailing sales and get bought out at between five and eight times, this seems to be a fair deal for both parties. (For more on this topic, check out The Wacky World Of Mergers And Acquisitions.)


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http://stocks.investopedia.com/stock-analysis/2010/Covidiens-Still-Hungry-COV-SMTS-EW-MASI-BLUD-VOLC-ZOLL0617.aspx