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Tyco cuts surgical deal
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May 26, 1998: 6:42 a.m. ET
Latest in wave of buyouts, Tyco bids $3.3B for surgical staple maker
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NEW YORK (CNNfn) - Grafting on another medical products company, Tyco International Ltd. said it will buy U.S. Surgical Corp., a maker of disposable medical sutures and staples, for $3.3 billion in stock.
As part of the deal, Tyco will exchange 0.7606 shares for each U.S. Surgical share, valuing that company at $42.50 per share. Its shares were up sharply in recent sessions amid takeover speculation.
Shares of Tyco (TYC) closed Friday down 3/4 at 55-11/16. Shares of Norwalk, Conn.-based U.S. Surgical (USS) rose 2-5/16 at 39-1/4 Friday, building on a double-digit percentage gain over the past several sessions.
(Click here for a chart of Tyco's share price)
The deal, the latest in an 80-buyout string at Tyco over the past few years, will blend Tyco wound care and vascular products with U.S. Surgical's product line. In January Tyco bought the medical products division of American Home Products Inc. for $1.7 billion.
"U.S. Surgical is an excellent strategic fit with our disposable medical products group and will be immediately accretive to earnings,'' said L. Dennis Kozlowski, Tyco chairman and chief executive officer, in a company announcement issued late Monday.
"With this transaction, Tyco will have $4.5 billion in medical product sales, a solid presence in the operating room and a greatly expanded array of products for use throughout a hospital,'' Kozlowski added.
The deal, which has been approved by both boards, will be accounted for as a pooling of interests and will be tax-free for shareholders.
"The merger makes solid business sense, provides Tyco with tremendous cost saving synergies and gives U.S. Surgical the opportunity to leverage its marketing and technical expertise as part of the Tyco family," said Leon C. Hirsch, who will stay chairman and chief executive officer of U.S. Surgical.
"There is a natural fit between these businesses that will serve as an excellent platform for the continued growth of U.S. Surgical's products throughout the world,'' he added.
Bermuda-based Tyco is a diversified manufacturing and service company and is the world's largest manufacturer of fire protection systems. Tyco had $6.6 billion in revenues in 1997. 
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Tyco
U.S. Surgical
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