After more than a year’s worth of planning and preparation, Covidien , formerly known as Tyco Healthcare (both Mansfield, Massachusetts), has been spun off from Tyco International (Pembroke, Bermuda).

The separation, which also included the spinoff of Tyco Electronics (Berwyn, Pennsylvania), occurred last Friday in a tax-free distribution to shareholders. The companies are now three separate entities.

Each shareholder of the former conglomerate received one share of Covidien and one share of Tyco Electronics for every four common shares of Tyco International. Every four common shares of Tyco International were converted into one share in a reverse stock split.

“It’s not just a name change — just the fact that we’re changing names isn’t sufficient,” Joe Almeida, Covidien’s president of medical devices, told Medical Device Daily. “The birth of Covidien is a $10 billion spin-off that has been close to a 12-month process. We’ll be investing in our franchises at an aggressive rate.”

Covidien, which specializes in surgical instruments, is now investing aggressively in research and development in its core devices business and says it will consider acquisitions in the $60 million to $250 million range as it looks to expand its offerings of surgical, respiratory and energy-based devices.

While the company was attached to Tyco it feverishly wrestled with sluggish revenue growth and declining profitability because of under-investment. In 2006, the company had $9.65 billion in sales — a paltry increase from the $9.54 billion in sales it did in 2005.

The goal, Covidien officials say, is to push revenue growth into the mid-single digits within the next few years.

During a recent shareholders meeting, Covidien officials said that revenue is likely to grow slowly during the two years following the split, before rising to double digit-growth in 2009. As a result of the split both parties will undergo what some analysts and advising investors are calling a dramatic change.

Covidien will primarily focus on medical devices, which accounts for 59% or $5.7 billion of the companies net sales, in 2006. Medical supplies and pharmaceutical supplies make up 23% of Covidien’s net sales, while imaging solutions and retail products accounted for 18% in net sales for 2006.

Fifty-four percent of the medical device sales are garnered from outside of the U.S. Almeida said a goal would be to take more steps to “market more” to the States.

He added that the split would give Covidien a chance to pour its resources into this goal.

Tyco International now goes from a company pulling in $41 billion of revenue to just $18.5 billion. The former conglomerate will now focus on fire and security and engineered products. But the split doesn’t come without some bumps and potential issues that Covidien could run into down the road.

“Unfortunately, we will have a transition period,” Almeida told MDD.

The transition period could involve the potential for Tyco International and its former component companies being sued by the trustee of its bonds, the Bank of New York and a group of bondholders who are saying the company is breaking the terms and conditions of the debt by not offering to buy back the debt at what they argue is full value. The lawsuit was filed with the U.S. District Court of the Southern District of New York (MDD, June 18, 2007). Covidien officials told MDD this week that they are unsure of how the lawsuit might affect the company since it split from Tyco.

In the past few years, Tyco International has been no stranger to lawsuits.

Last spring, the company reported that it had inked a $3 billion agreement to settle the majority of the class action suits over the company’s stock values as the struggling company attempted to right itself in the wake of previous mismanagement during the watch of CEO Dennis Kozlowski (MDD, May 16, 2007). Kozlowoski and ex-chief Mark Swartz were convicted in 2005 of defrauding Tyco of more than $150 million by theft and stock manipulation (MDD, June 25, 2005).

As a result of Kozlowski’s management, Tyco spent years repairing itself from the scandal.

Covidien has been tight-lipped regarding any changes or issues that might stem from the bondholders lawsuit. Instead the company said it is focusing on establishing the Covidien name.

“Our focus is on the launch,” Almeida told MDD. “The ability to [move forward] quickly will be our top priority.”