Procter & Gamble Testing Waters of Device Sector

Talk about grand entrances. The Procter & Gamble Co. is moving into the medical device sector with its $100 million acquisition of ConTIPI, an Israeli developer of disposable inserts to prevent urinary incontinence in women.

According to the Tel Aviv, Israel-based daily newspaper Maariv, P&G is willing to make an initial payment of $50 million to ConTIPI and another $50 million once certain milestones are achieved. However, other published reports put P&G’s initial payment at $15 million with the remaining being paid only if ConTIPI’s product generates annual revenue of more than $180 million.

ConTIPI executives did not comment on the acquisition, and P&G made no formal announcement of it. The two companies have had a distribution agreement since 2007—a deal that has been worth tens of millions of dollars. The merger replaces the distribution agreement, though most of the clauses are similar.

ConTipi will begin marketing its device in 2011. The U.S. Food and Drug Administration has approved ConTIPI’s product, but the firm has not yet marketed the device in the United States.

Reports of P&G’s acquisition surfaced as Moody’s released a report that said many investment-grade consumer product companies currently are in a strong financial position to make strategic deals and “ramp up payments to shareholders.” Most of these firms focused on shoring up liquidity during the economic downturn, the report stated.