Tyco Takes a Huge Step Forward with US Surgical Acquisition
With this deal, Tyco significantly enhances the product expansion it began on behalf of its Kendall medical products business when it purchased American Home Products' medical device businesses several months ago. The addition of US Surgical now makes Kendall a strong competitor to chief rival Johnson & Johnson with important brands in surgical staplers and electrosurgical equipment, and high tech businesses in cardiovascular and gynecology.
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Is there a medical device company today doing better than Covidien? The company is making a huge splash building new businesses and shoring up existing ones. But Covidien, formerly Tyco, hasn't always had it so good. A corporate scandal in the early 2000s brought Tyco's corporate management down and scuttled the healthcare business' strategic plan. After years of sitting on the sidelines, Covidien is back, stronger than ever.
Covidien, nearly a year removed from spinning out of scandal-plagued parent Tyco International, is pushing forward as an independent company. Covidien execs are investing in new product creation, sales and marketing efforts, and acquisitions. That means Covidien is about to make a big splash in the device industry, with devices bringing in two-thirds of this ambitious company's revenues.
There's little argument that over the past several years, Tyco International has emerged as a powerhouse in the hospital supply and medical device industries through aggressive deal-making and a creative leveraging strategy that has enabled it to increase profits even in price-sensitive markets. Now Tyco, under pressure from fall-out over the scandal engulfing Enron, is breaking up in an effort to restore investor confidence and value. Some time in the future, Tyco Healthcare will operate as a stand-alone company. Yet questions loom large as to how well Tyco's strategy will play with the investment community, with some industry executives believing Tyco Healthcare has more value broken-up than as a public company.