Medtronic gets EU regulatory green light for $43B merger with Covidien
Medtronic ($MDT) scored EU regulatory approval for its $43 billion acquisition of Covidien ($COV), days after U.S. antitrust authorities signed off on the deal subject to certain conditions.The Minneapolis, MN-based company on Friday got a green light from the European Commission for its pending merger as long as the companies sell Stellarex, a drug-coated balloon being developed by Covidien, The Wall Street Journal reports. Last week, Medtronic agreed to sell the Irish devicemaker's drug-coated catheter business to Spectranetics ($SPNC) to settle Federal Trade Commission (FTC) charges that its acquisition of Covidien was anticompetitive.Medtronic and Covidien are both developing drug-coated balloon catheters to treat peripheral artery disease, and the devices would compete with those made by C.R. Bard ($BCR), the FTC noted in its complaint. But Medtronic and Covidien are the only companies with drug-coated balloon products in clinical trials geared toward FDA approval, potentially creating an unfair market advantage once the merger goes through."It is likely that Covidien would have constrained Medtronic in the near future, in view of the promising first clinical trials' results of Stellarex," the European Commission said in a statement. "The acquisition, as initially notified, would therefore have eliminated a credible competitor and would likely have reduced innovation in this area."Covidien alluded to a possible sale of its Stellarex drug coated balloon in November, when it announced in an SEC filing that it would hand the device to Spectranetics for $30 million to usher through its pending merger. The deal is scheduled to close in early 2015, and the companies plan to hold a special meeting in January to get shareholder approval for the merger, according to the WSJ story.Meanwhile, Medtronic continues to forge ahead with R&D for its own drug-coated balloon. The company recently touted positive study results for its IN.PACT Admiral device in a late-stage trial with 331 subjects at 57 sites across Europe and the U.S. The study treated a subset of patients with diabetes and PAD with its IN.PACT Admiral drug-coated balloon or traditional balloon angioplasty, and found that 82.2% of the patients experienced restored blood flow through the diseased artery when treated with Medtronic's drug-coated balloon, as opposed to 52.4% in the traditional angioplasty group.
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