Intuitive Surgical Inc. to merge with Computer Motion Inc. at 2.47 times revenue

The Deal: Intuitive Surgical Inc. and Computer Motion Inc. have signed a definitive merger agreement. Under the terms of the agreement, Computer Motion's equity holders will receive 32 percent of the combined company and Intuitive's equity holder's will receive

68 percent. Intuitive is expected to issue approxiriately 15.39 million shares in exchange for Computer Motion's outstanding stock, options, and warrants. The deal values Computer Motion at about $63 million. The transaction still requires shareholder approval.

Discussion: Computer Motion makes surgical robotic systems used by approximately 1,000 medical institutions in 32 countries. Company products include voice-controlled, robotic endoscope positioning systems and a control center which coordinates and manages surgical devices.

Intuitive Surgical develops software, hardware, and optics that allow doctors to perform robotically aided surgery from a remote console. Intuitive's The da Vinci system faithfully reproduces the doctor's hand movements in real time, with surgery performed by tiny electromechanical arms and instruments inserted in the patient's body through small, minimally invasive ports.

The merger effectively ends two years of patent disputes between the two companies. Both companies have advanced the science of using surgical robotics to create less invasive surgical techniques.

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