Covidien's birth poses name-recognition challenge

How do you bring a $10 billion baby into the world?

For the new healthcare giant Covidien Ltd. , the answer starts with balloons, T-shirts, more than a hundred parties around the globe, and a Manhattan building draped with the company's logo.

Tonight Covidien is expected to spin out of corporate parent Tyco International Ltd., instantly becoming one of the world's largest medical equipment makers. With headquarters in Mansfield and a product line that ranges from simple gauze pads to $500,000 hospital imaging systems, the company's executives and marketers are in the unusual position of introducing a vast corporation with almost zero name recognition.

"It's going to be an eye-opener for a lot of people," said Mike Sheehan , chief executive of Hill, Holliday , the Boston advertising firm handling Covidien's launch. "It's a company you've never heard of, and on day one it's a $10 billion company whose headquarters is right down Route 95."

Covidien's annual sales put it above Boston Scientific Corp. , the state's most valuable life-science company. It has far more employees -- 43,000 -- than even the biggest local healthcare firms, although most work outside the state.

After the market closes today, Tyco International expects to split into three separate companies, issuing shares to current stockholders and making the healthcare division officially independent. On Monday, Covidien stock begins trading publicly. In anticipation, Covidien has put billboards along the Massachusetts Turnpike and Interstate 93, as well as a logo on Fenway Park's famous left-field wall. On July 10, chief executive Richard Meelia is scheduled to ring the opening bell of the New York Stock Exchange. That day the Covidien logo will run across the Reuters billboard in Times Square, and the company plans employee celebrations at more than 150 locations, including a festival at Gillette Stadium for the 1,000 people who work at its offices in Mansfield and Waltham.

The launch is more than just a branding exercise. The company's value depends partly on whether Wall Street analysts see it as a fast-moving healthcare stock with growth potential, or a leaden giant hobbled by the sheer range of its businesses. Meelia just spent 10 days on the road telling investors the company would focus on innovation and higher-margin products.

"The whole idea of making clear Covidien is a different company than Tyco Healthcare is really important," said Meelia, in an interview yesterday. "Three years from now, I think the profile of the business will be significantly different."

To reach analysts directly, the company is buying ads in financial press, including The Wall Street Journal and the Financial Times, as well as on billboards and phone kiosks in lower Manhattan, where money managers cluster.

One of Covidien's challenges is to shed the reputation its parent company garnered earlier this decade, when free-spending Tyco chief L. Dennis Kozlowski went to jail for bilking the company. In May, Tyco agreed to pay $3 billion to settle shareholder lawsuits from that era.

The firm still faces one obstacle, a lawsuit from bondholders who say the spin off deal doesn't give them full value. Tyco Healthcare spokesman Eric Kraus says the company does not expect the suit to delay the breakup.

Another challenge for Covidien is to unify a healthcare conglomerate that has never had a strong identity of its own.

"If you look at what Tyco Healthcare was, it's a collection of acquired businesses, and some of these companies that were acquired have been around for a century or more," said Kraus , who also oversees Covidien's marketing. "People were aligned with the brands and those companies. For us to be successful, we're going to have to have everybody aligned behind Covidien."

The company plans to simplify its staggering roster of 7,000 brand names, changing hundreds of thousands of forms, brochures, and other materials. Packaging will get the Covidien logo along with one of the top names that currently fall under the Tyco umbrella: Mallinckrodt , Kendall Healthcare , Autosuture , and others.

"In the past, we really let our collection of companies have their identities," said Kraus. "It had a lot to do with the fact that we were a division of a conglomerate. Now as a stand-alone company, we want to take the power of those brands and have a halo effect of what the company is all about."

Stephen Heuser can be reached at sheuser@globe.com.