Tyco in $1.4-Billion Deal for Kendall International

From Reuters

In one of the largest mergers in the medical products industry, Tyco International Ltd. said Thursday that it will acquire Kendall International Inc., which makes Curad bandages and other disposable medical products, for $1.4 billion in stock.

The move by Exeter-based Tyco, which also manufactures a broad range of goods including fire-protection systems, gives it a firm position in the high-profit area of disposable medical products, the company said.

Under the definitive agreement, Tyco will issue Kendall shareholders $60.45 worth of its stock for each Kendall share.

Following news of the deal, Tyco’s stock fell and remained lower for the rest of the day. It closed at $45.625, off $1.75, while Kendall shares rose $3 to $54, both on the New York Stock Exchange.


Tyco said the deal should close before the end of the year.

The acquisition “represents a quantum leap in (Tyco’s) disposable medical business,” Chief Executive L. Dennis Kozlowski said.

“Our processes and equipment are virtually identical to those currently in use at Kendall, which should allow us to share manufacturing efficiencies and technology,” he said.

“The Kendall merger is a very important step in the strategy we developed several years ago to translate our manufacturing expertise in packaging into higher-margin products in the disposable medical products market.”


The company said the transaction will create a $1.2-billion business segment that will serve as a platform for future growth.

Kozlowski compared the proposed Kendall merger to Tyco’s creation and expansion of its fire-protection business in the late 1980s. That operation now has revenue of about $1.6 billion a year, he said.

Tyco said Richard Gilleland, Kendall’s chairman and chief executive, will continue as Kendall’s president and become a Tyco director.

Gilleland said in a statement, “This transaction provides a number of advantages and opportunities to Kendall, including Tyco’s fast-growing $80-million medical disposables business.”

In the same announcement, Tyco said its board has authorized the buyback of up to 2.9 million of its common shares, or about 10% of the shares to be issued in the acquisition.

The acquisition of Mansfield, Mass.-based Kendall brings under Tyco’s umbrella a broad line of home health care products. These include adhesive bandages and gauze pads, elastic supports, hosiery, diabetic products, durable medical equipment and incontinence care products, sold under the brand names Curad, Curity and Futuro.