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Chilton Investment Company raises its stake in Covidien plc

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Feb. 24 2015, Updated 9:05 a.m. ET

Chilton Investment Company and Covidien plc

Chilton Investment Company started new positions in Sonic Corporation (SONC), Endo International plc (ENDP), Apache Corporation (APA), and Realogy Holdings Corp. (RLGY). It closed positions in FedEx Corporation (FDX) and Priceline Group Inc. (PCLN). Chilton increased position in FleetCor Technologies, Inc. (FLT) and Covidien plc (COV). It decreased positions in Wynn Resorts Ltd. (WYNN) and Timken Company (TKR).

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Chilton Investment Company added to its position in Covidien plc (COV) in 4Q14. The position accounts for 3.22% of the fund’s total portfolio in 4Q14, up from 0.49% in 3Q14. COV has a 1.42% exposure to the Vanguard Health Care ETF (VHT). The ETF tracks the overall performance of 326 publicly traded companies in the health care sector.

Overview of Covidien

Ireland-based Covidien plc (COV) is engaged in the development, manufacture, and sale of healthcare products for use in clinical and home settings. It operates its businesses through the following two segments:

  • Medical Devices. This segment includes the development, manufacture, and sale of endomechanical instruments, energy devices, soft tissue repair products, vascular products, oximetry and monitoring products, airway and ventilation products, and other medical products.
  • US Medical Supplies. This segment includes the development, manufacture, and sale of nursing care products, medical surgical products, SharpSafety products, and original equipment manufacturer products.
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Covidien posts 1Q15 results

In January 2015, Covidien Plc (COV) announced its 1Q15 results. The company reported net sales of $2.69 billion, an increase of 2% when compared to revenues of $2.64 billion for 1Q14. Operational sales growth for the quarter was 6% since the foreign exchange rate movement lowered the quarterly sales growth rate by four percentage points.

José Almeida, chairman and CEO (chief executive officer) of COV, said, “We continued to perform strongly during the quarter, driven by considerable growth in Surgical Solutions, our largest product category, as well as important new offerings and a sustained focus on productivity improvement. We expect to maintain this solid performance as we continue to invest in and execute our global strategy.”

Medtronic acquires Covidien Plc in January 2015

In January 2015, Medtronic Inc. (MDT) completed the acquisition of Covidien Plc (COV). The cash and stock transaction was valued at approximately $49.9 billion. According to the acquisition agreement, Medtronic Inc. and Covidien Plc will now become wholly owned subsidiaries of Medtronic Plc, the new combined holding company.

This acquisition will help the company capture a considerable market share in the United States as well as Europe. According to Omar Ishrak, chairman and CEO (chief executive officer) of Medtronic, “The culmination of this acquisition marks a significant milestone in our industry, creating a company uniquely positioned to alleviate pain, restore health and extend life for more patients around the world. We can now bring together the extensive and innovative capabilities of both Medtronic and Covidien with an underlying objective to solve healthcare’s biggest challenge – expanding access and improving clinical outcomes, while lowering costs,”

In the next article in the series, we’ll look at Chilton Investment Company’s exit from FedEx Corporation (FDX).

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