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First Quality to Acquire Covidien Retail Product Business

December 17, 2007

Acquisition includes large private label hygiene business.

Nonwovens and hygiene products manufacturer First Quality will buy the retail business of  Covidien for approximately $335 million. Covidien’s Retail Products business, headquartered in King of Prussia, PA, reported sales of $744 million in fiscal 2007. Products include adult incontinence, feminine hygiene, wet and dry wipes and baby diaper products. According to First Quality, the transaction, which is expected to be completed in the first calendar quarter of 2008, will allow the company to enhance its relationships with retail customers by offering broader more innovative product lines and greater value.
“The acquisition of Covidien’s Retail Products business is a compelling opportunity for First Quality,” said Richard Martorella, Director of Finance and Treasury of First Quality.  “The addition of Retail Products creates a more comprehensive Absorbent Hygiene business, solidifying First Quality’s position in our three core areas.  Together, the First Quality Absorbent Hygiene division will provide customers with a full suite of premium products serving the infant care, adult incontinence and feminine hygiene segments.  We welcome Covidien’s Retail Products business and its hardworking and dedicated employees to the First Quality family.”
Richard J. Meelia, president and CEO of Covidien said, “Retail Products has been part of Covidien for nearly a decade and has a workforce committed to delivering high-quality products to North American retailers.  Following a thorough review and evaluation of strategic alternatives for the business, we determined that the unique characteristics of Retail Products did not fit with Covidien’s goal to be the leading global healthcare products company.  This transaction is consistent with Covidien’s strategy to focus its portfolio and reallocate resources to its core healthcare business.  We look forward to working closely with First Quality’s talented team and we anticipate a smooth transition.”
Founded in 1990, First Quality Enterprises, Inc. and its affiliates are a closely-held diversified group of companies manufacturing, selling and distributing branded and private label absorbent hygiene, paper and nonwoven products into the healthcare, retail and commercial channels.  In May 2007, the company announced it would expand its private label business with diaper manufacturing. One of the private label diaper market’s largest contributors, Covidien reportedly manufactures diapers under the White Cloud brand for Wal-Mart.