Integra Buys Confluent Product Line from Covidien
Integra LifeSciences Holdings Corp. is buying the Confluent Surgical product lines from Covidien plc.
The brand includes surgical sealants, adhesion barriers, and—most notably—the DuraSeal, which is is used in spinal surgery and applied over stitches to prevent cerebrospinal fluid from leaking out of the incision site. The technology was approved by the U.S. Food and Drug Administration in 2009.
The companies expect to complete this transaction by the end of the first calendar quarter of 2014, pending the standard regulatory approvals.
Under the terms of the agreement, Covidien will receive an initial cash payment of $235 million from Integra at the close of the transaction. Additionally, Covidien may receive up to $30 million, contingent upon the achievement of certain performance measures related to the transition of the Confluent Surgical business to Integra.
"The addition of the DuraSeal product lines enables our sales force and distributor partners to provide their customers with a best-in-class dural sealant as they seek to support surgeon's efforts to minimize cerebrospinal fluid leaks upon completion of the surgical procedure," said Robert Davis, president of Integra's U.S. Neurosurgery division. "This acquisition perfectly complements our global Neurosurgery growth strategy aimed at providing a broader set of solutions for surgical procedures in the head. Together with our broad DuraGen product line we are fortunate to have even more options to serve our customers and the individual needs of their patients."
Covidien is divesting the product line to better align existing product categories and position them for growth.
"This transaction allows Covidien to better focus on its global strategic priorities," said Bryan Hanson, group president, Medical Devices & U.S., Covidien. "Based on Integra's presence in neurosurgery and spine surgery combined with a strong portfolio of clinical evidence, we believe these products will thrive under Integra's ownership. We express our sincere gratitude to our dedicated employees and the clinicians who have partnered with us throughout the years."
Confluent Surgical products include: DuraSeal, DuraSeal Xact, VascuSeal and SprayShield, which—according to Covidien—generated approximately $65 million in revenue during 2012. The margin generated by the product line is “close” to Integra’s regenerative product line, company officials said. Integra expects to provide detailed guidance regarding the financial impact of the deal at its close.
Initially, Integra would expect the acquisition to add $57 million to $60 million in revenue in the first full year of the combination, and to then grow 3-5 percent longer term.
"This transaction adds scale to our business, leverages one of our strongest customer call points, and drives accretion to our gross margins," said Jack Henneman, Integra's chief financial officer.
Integra expects that revenues acquired through this transaction would be reported in its U.S. Neurosurgery and International divisions.
Based in Plainsboro, N.J., Integra LifeSciences focuses on technology for orthopedic extremity surgery, neurosurgery, spine surgery, and reconstructive and general surgery.
Though based in Ireland, Covidien's U.S. base—and largest center of operations—is located in Mansfield, Mass.