Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
So what: The cash-and-stock deal --$35.19 in cash and 0.956 of a Medtronic share -- values Covidien at $93.22 per share and represents a premium of 29% to its closing price on Friday. Medtronic is making the move to increase its global reach and significantly boost scale but, judging by its own stock's 2% decline today, Mr. Market isn't too thrilled with the price that management is paying to do it.
Now what: The transaction is expected to be accretive to Medtronic's cash earnings and GAAP earnings in FY 2016 and FY 2018, respectively. "This acquisition will allow Medtronic to reach more patients, in more ways and in more places," said Medtronic Chairman and CEO Omar Ishrak. "Our expertise and portfolio of services will allow us to serve our customers more efficiently and better address the demands of the current health care marketplace. We also look forward to welcoming the Covidien team to Medtronic and working together to improve health care outcomes globally." So while Covidien is likely all popped out at this point, Medtronic's newly bolstered top and bottom line growth prospects might be worth looking into.
Leaked: A huge small-cap opportunity
This smart device –kept secret until now – could mark a new revolution in smart tech (with big implications for health care). It’s a gigantic market opportunity -- ABI Research predicts 485 million of its type will be sold per year. To learn about the small-cap stock making this device possible – the stock that could mint millionaires left and right when its full market potential is realized – click here.