A Medical Device Daily

MedCath (Charlotte, North Carolina) reported it has entered into a definitive agreement to sell its subsidiary, which is the indirect owner of a one-third ownership interest and management rights in Avera Heart Hospital of South Dakota to Avera McKennan (both Sioux Falls). The transaction is expected to close in 45 to 90 days, subject to certain closing conditions.

Purchase terms are $20 million plus a percentage of eligible cash, which is anticipated to net nearly $16 million to MedCath after closing costs and taxes. After the closing, two-thirds of the hospital will be owned by Avera McKennan, a member of Avera Health, a regional healthcare family of more than 235 facilities in South Dakota, North Dakota, Minnesota, Iowa and Nebraska.

The agreement marks MedCath's second transaction since it reported the formation of a strategic options committee in March to consider the sale either of the entire company or its assets. Earlier this month, MedCath said it had entered into an agreement to sell Arizona Heart Hospital. MedCath also said in February that it had entered into an agreement to sell Heart Hospital of Austin (Medical Device Daily, Aug. 10, 2010).

In other dealmaking activity:

• Biomagnetics Diagnostics (San Francisco) reported the signing of a Letter of Intent (LOI) with Lanzhou New Sunshine Plastics Industry. This expected acquisition is the fourth planned acquisition targeted at a share price of US $1.50 for Biomagnetics Diagnostics' common shares. Under the terms of the LOI, Biomagnetics will acquire all assets of New Sunshine Plastics manufacturing facility, and issue 4.22 million shares of Biomagnetics common stock. Biomagnetics said it intends to use this manufacturing facility to house the equipment and technologies being acquired from Lanzhou Sanhuan New Technology Development in order to meet the strong and growing Chinese and worldwide demand for biodegradable PVA plastic film.

• Covidien (Dublin, Ireland) reported that it has completed the sale of its Specialty Chemicals business to an affiliate of New Mountain Capital(New York) for a cash purchase price of about $280 million.

The decision to divest Specialty Chemicals was made following a thorough evaluation of a number of strategic alternatives. The decision is consistent with Covidien's strategy to streamline its portfolio and reallocate resources to its faster-growing, higher-margin businesses, where the company has or can develop a global competitive advantage.

The business is currently reported as a discontinued operation and the transaction is not expected to have a material effect on Covidien's operating income or earnings per share for fiscal 2010 or 2011.

The company also said that it has completed the sale of its Sleep Therapy continuous positive airway pressure (CPAP) and Bi-level products to PH Invest (Luxembourg, Germany).

Financial terms of the transaction were not disclosed.

The sale, including the Nancy, France manufacturing facility, related commercial operations in Europe and products sold under the GoodKnight and Sandman brands, was made following a thorough review and evaluation of a number of strategic alternatives. The decision is consistent with Covidien's strategy to streamline its portfolio and reallocate resources to its faster-growing, higher-margin businesses, where the company has, or can develop, a global competitive advantage, it said.

According to the company, the transaction is not expected to have a material effect on Covidien's operating income or earnings per share for fiscal 2010 or 2011.