Boston Scientific to sell neurovascular business to Stryker for US$1.5bn
9 Nov 2010
Boston Scientific Corporation has announced that it is selling its neurovascular business to Stryker Corporation for US$1.5 billion.
Boston Scientific established its neurovascular business in 1997. Headquartered in Fremont, California, the business employs approximately 1,150 people and reported 2009 revenues of US$348 million.
The Neurovascular business develops less-invasive medical technologies used to treat brain aneurysms and other types of cerebrovascular disease.
Boston Scientific will provide transitional services to Stryker through a transition services agreement, and will also supply products to Stryker at cost for a period of approximately 24 months following the closing of the transaction, subject to extension.
Boston Scientific expects to record a gain upon closing the deal in excess of $500 million, excluding any impact of the receipt of future milestone payments. Total after-tax proceeds, assuming the achievement of these milestones, are expected to be approximately $1.2 billion.
The company's share price has risen from a low of 5.04 at the beginning of September to 6.79 at close on 8 November, but has still some way to go to reach its peak of 9.79 in January or even the 5-year peak of over 27 in 2005.
The company says it expects to allocate approximately half of the net proceeds to acquisitions and the remainder to the retirement of pre-payable debt. The transaction is expected to close before the end of the year.
"The sale of our Neurovascular business is part of our overall strategic plan that will refocus our portfolio to, amongst other criteria, leverage existing sales forces with least invasive, cost and comparatively effective medical devices that reduce or eliminate refractory drug regimens," said Ray Elliott, President and Chief Executive Officer of Boston Scientific.
"The proceeds from this sale will allow us to invest in future growth opportunities more aligned with that strategy while also reducing overall debt leverage."