As a part of a larger corporate restructuring that was initially announced in January 2006, Tyco International Ltd. (Pembroke, Bermuda) announced late last month that it would spin off Tyco Healthcare. With annual sales of nearly $10 billion, Tyco Healthcare is one of the top five players in the worldwide medtech market. Under the name Covidien, the new company will operate independently from the parent firm.
Richard Meelia, president and CEO of Tyco Healthcare, said the new name "reflects our corporate goal to build and strengthen our role as an integral healthcare partner, supporting the lifesaving work of medical professionals." In a prepared statement, the company said the name is designed to evoke togetherness--represented by the prefix co --and the Latin word for life, vita. It was selected from more than 6000 suggested names, including Aquient, Evendra, and Vancian.
"Covidien was the result of a careful process that focused on distilling from our customers, employees, and industry experts the attributes of a best-in-class healthcare business," said Eric Kraus, senior vice president of corporate communications for Tyco Healthcare.
The new company will remain at Tyco Healthcare's Mansfield, MA, headquarters, where it employs 1300 people. Another 700 employees are employed at two other locations in the state. Covidien will continue to manufacture all of Tyco Healthcare's disposable, wound care, and medical instrumentation products across its Autosuture, Kendall, Mallinckrodt, Nellcor, and Puritan Bennett brands.
In addition to Covidien, the spinoff will result in two other independent entities: Tyco International and Tyco Electronics. The company's corporate management sees the reorganization, which was formally filed with the Securities and Exchange Commission last month, as the final chapter in the old Tyco's saga. The former $41 billion conglomerate was rocked by corporate scandal in 2002. It is still fending off a bevy of shareholder and other lawsuits associated with the firm's mismanagement under the direction of former CEO L. Dennis Kozlowski, who is currently in federal prison. In its filings with the SEC, Covidien acknowledges that it will remain liable for lawsuits originally filed against Tyco.
Meelia, the only Kozlowski-era head of a Tyco division still in place, will carry his position into the new organization. The company, which vigorously asserts that there are no remaining vestiges of the Kozlowski era, says it will launch a high-visibility marketing and promotion campaign to build the Covidien brand.The spinoff is subject to approval from the SEC and the Tyco board. Such approvals are expected before June 30, 2006.
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