Tyco Agrees to Buy U.S. Surgical

Tyco International Ltd. agreed to buy U.S. Surgical, a surgical products company, for $3.3 billion in stock, in a move that would add to Tyco’s disposable medical products business.

U.S. Surgical shares would be swapped for 0.7606 Tyco shares, which were valued Friday at $42.50, or 8.3% higher than U.S. Surgical’s closing price.

U.S. Surgical, with annual revenue of $1.4 billion, makes products used in surgery, such as surgical staplers, sutures and disposable instruments. It also has laparoscopic, electrosurgical and ultrasound surgical products.

Hamilton, Bermuda-based Tyco said the acquisition would boost its medical products sales to $4.5 billion and add to its earnings. Tyco has several other businesses in addition to its medical divisions, including fire detection equipment, flow control products and electronic components.

“U.S. Surgical is an excellent strategic fit with our disposable medical products group and will be immediately accretive to earnings,” Tyco Chairman and Chief Executive L. Dennis Kozlowski said in a statement.

Leon Hirsch, who will remain chairman and chief executive of U.S. Surgical, said the merger makes business sense and is a good deal for shareholders.

Shares in Norwalk, Conn.-based U.S. Surgical rose $2.31 to $39.25 on Friday, and Tyco shares fell 75 cents to $55.69, both on the New York Stock Exchange. Shares of both companies did not trade Monday because of the Memorial Day holiday.

U.S. Surgical shares rose 6.3% on Friday because of speculation that it would be acquired.

The company’s profit has declined because of competition from Johnson & Johnson, which has managed to nail down more supply contracts from hospitals by offering a wider range of products that it bundles together.

Separately, Tyco said it purchased 6.8 million shares of Lyon, France-based Cipe France.