Shares of Covidien plc (COV) hit a new 52-week high of $104.06 in mid-day trading on Jan 7 following a significant advancement in its impending merger with Medtronic, Inc. (MDT). Covidien’s shares closed marginally lower at $103.95 on the same day, translating into an impressive one-year return of roughly 52%.
This Zacks Rank #4 (Sell) stock has a market cap of around $47 billion while average volume of shares traded over the last three months stands at roughly 4.2 million.
Shares of this Irish company have been scaling new highs as the merger deal between the two companies is making considerable progress. Per the latest development, on Jan 6, majority of Medtronic’s shareholders approved the medical technology giant's long proposed takeover of Covidien for a total cash and stock value of $42.9 billion.
On the same day, Covidien reported in a special court ordered investors meeting that 99.01% of its shareholders have also given the final go-ahead for this deal.
The merger deal has already obtained all the necessary regulatory go-aheads and antitrust clearances including approvals from the U.S. Federal Trade Commission, the European Commission, the Chinese Ministry of Commerce and the South Korean Fair Trade Commission.
We believe that this latest thumbs-up from the shareholders of both the companies takes the transaction to its final leg. As of now, the deal is expected to close in the last week of January or early Feb 2015, subject only to the approval of the Ireland High Court.
The deal between Covidien and Medtronic was announced on Jun 15, 2014. Notably, shares of Covidien jumped nearly 21% the next day, reflecting investors’ confidence. Following the buyout, Medtronic will boast a comprehensive product portfolio, a diversified growth profile and broad geographic reach.
We believe that the completion of this merger will give the medtech space the world's leader in medical technology and services, with a presence spanning across 150 countries.
Better-ranked medical product stocks include ICU Medical (ICUI) and INSYS Therapeutics (INSY). Both these stocks hold a Zacks Rank #1 (Strong Buy).
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