Tyco International Ltd. to purchase InnerDyne Inc. for 8.82 times revenue

Weekly Corporate Growth Report, Oct 16, 2000

The Deal: Tyco International Ltd. has agreed to purchase InnerDyne Inc. for $180 million in stock. The acquisition is an effort to expand Tyco's line of surgical instruments sold to hospitals. After the news of the transaction was announced, shares of Tyco inched up 94 cents to $52.06, while InnerDyne shares slipped 22 cents to close at $6.91.

Discussion: InnerDyne Inc. develops and markets products that use its radial dilation technology in minimally invasive surgery. The company's first commercial product, The Step, which accounts for more than 90 percent of sales, enables surgeons to create a small puncture wound that can be dilated, providing access to the abdominal cavity with minimal tissue trauma. InnerDyne has also developed biocompatible coatings to help deliver pharmaceuticals to specific areas in the body and a thermal ablation system to treat excessive uterine bleeding. The firm is developing a system that would deliver both drugs and radiation simultaneously to cancer sites in the body.

Tyco International Ltd.'s largest group of businesses, Telecommunications and Electronics, makes electrical connectors, conduits, printed circuit boards and undersea fiberoptic cable. Its Healthcare and Specialty Products group makes Curity bandages, patient-monitoring equipment, crutches, adhesives and plastic hangers. Tyco's Fire and Security Services unit is the world leader in security and fireprotection systems. Its Flow Control group makes pipe, pipe fittings, tubing, flow meters and other steel equipment for commercial and industrial applications.