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AICC Member Given Imaging buys product line from Medtronic

Published by: Globes
12/09/2008

The new operations in Israel are expected to create 30-40 jobs.
Capsule imaging developer Given Imaging Ltd. (Nasdaq: GIVN; TASE: GIVN) has bought the Bravo pH monitoring business for diagnosing Gastroesophageal Reflux Disease (GERD) from Medtronic (NYSE: MDT) for $20 million.
The Bravo system uses a disposable capsule temporarily placed in the esophagus that measures pH levels and transmits the data to an external receiver.

During the first 12 months after the transaction closes, Medtronic will continue to supply the Bravo products to Given Imaging. During this 12-month period, Given intends to move the Bravo system manufacturing operations to Israel, a move that is expected to create 30-40 jobs toward the end of 2009.

“The acquisition is a good strategic deal, not only for the company, but also for the State of Israel”, said Given president and CEO Homi Shamir. He added that if the product line develops as Given expects, the job creation figure can double.

A small portion of the purchase price is contingent upon Medtronic completing the development of a new capsule delivery system already underway

Given president and CEO Homi Shamir said, “We believe that the Bravo pH monitoring system, with a wireless capsule that is a more patient-friendly test for GERD, is a synergistic and strategic fit with our innovative PillCam platform of GI diagnostic tools.”

Shamir added, “As we transition the business during 2009, we anticipate that sales of the Bravo system will add approximately $12 million to our top-line results. After we transfer the manufacturing of the Bravo system from the US to Israel, we expect to realize bottom-line gains as well.”

Shamir explained that Medtronic sold the product line as part of a strategic decision to exit the sector, “and we jumped on it”.

pH testing, usually through catheters sent into the esophagus, is a classic method of diagnosing GERD, and during 2007, over 258,000 pH procedures were conducted in the US. The Bravo system is the only wireless, catheter-free pH test for GERD.

Gastroesophageal reflux (also known as heartburn) occurs when contents from the stomach flow back up into the esophagus. Occasional heartburn is normal, but chronic heartburn caused by GERD can affect daily activities and damage the esophagus. Datamonitor estimates that around 147 million people in the US, Japan, France, Germany, Italy, Spain and the UK (around 20% of the population) suffer from GERD.

Shares in Given closed at $9.80 on Nasdaq on Monday, reflecting a market cap of $286.7 million. On the Tel Aviv Stock Exchange (TASE), its shares were little changed, after rising 4.7% on Monday. So far in December, Given’s TASE-listed shares are up 5.6%.

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