DUBLIN (AP) -- Covidien PLC on Thursday said it plans to spin its pharmaceuticals business off from the rest of the company, which makes medical devices and supplies. Its U.S. shares rose 3 percent in premarket trading.
The drug business is one of the world's largest makers of bulk acetaminophen, the active ingredient in Tylenol, and the largest supplier of stronger, opioid pain relievers in the U.S. It also makes generators that produce an injectable radioactive isotope for diagnostics.
The drug business has annual sales of $2 billion compared to $9.6 billion for the rest of the company.
Jose Almeida, the Covidien CEO, said the company had been considering the spin-off for some time because of the differences between the drugs and devices business.
"We believe that now is the right time to do so because we have significantly improved the operations, performance and pipeline of our pharmaceuticals business," he said in a statement.
In the spin-off, Covidien shareholders would receive shares of the new company. The company expects the deal to be tax-free, and said it could take up to 18 months to complete.
Covidien is based in Ireland but its shares are listed on the New York Stock Exchange. They were up $1.33, or 3.1 percent, at $43.49 in premarket trading.