Mergers and Acquisitions

* On December 8, 2013, Covidien and Given Imaging have announced a definitive agreement under which Covidien will acquire all of the outstanding shares of Given Imaging for $30.00 per share in cash, for a total of approximately $860 million, net of cash and investments acquired. This transaction provides Covidien additional scale and scope to serve the multibillion dollar global gastrointestinal (GI) market and supports the Company’s strategy to comprehensively address key global specialties and procedures.

Given Imaging provides one of the broadest technology platforms for visualizing, diagnosing and monitoring the digestive system, including its flagship PillCam®, a minimally-invasive, non-sedation, swallowed optical endoscopy technology for the small bowel, esophagus and colon. In total, Given Imaging has seven product lines across 21 GI disease states. The company also offers industry-leading GI functional diagnostic solutions including ManoScan® high resolution manometry, Bravo® capsule-based pH monitoring, Digitrapper® pH-Z monitoring and SmartPill® motility monitoring systems.

The transaction is subject to customary closing conditions, including Given Imaging shareholder approval and the receipt of certain regulatory approvals, and is expected to be completed by March 31, 2014. The Boards of Directors of both companies have approved the transaction, and the Boards of Directors of DIC, Elron and Rdc, owners of 44 percent of Given's outstanding shares, have approved voting in favor of the transaction. DIC has also entered into a customary voting agreement with Covidien.

Covidien intends to finance the transaction through cash on hand and will report Given Imaging within the Medical Devices business segment. Upon closing of the transaction, Covidien expects Given Imaging will add between $40 and $50 million per quarter in incremental revenue to the Medical Devices segment.

On a reported U.S. GAAP basis, the transaction is expected to be dilutive to both operating margin and earnings per share (EPS) in fiscal 2014. On an adjusted basis, excluding one-time items and transaction costs, management expects the transaction to be neutral to both operating margin and EPS in fiscal 2014. The transaction is expected to be accretive to operating margin and EPS both on a U.S. GAAP and on an adjusted basis in fiscal 2015 and beyond. From a “cash earnings” standpoint, which excludes the impact of amortization, the transaction is expected to be accretive immediately after it closes.