Boston Scientific to Acquire Bayer Interventional - Analyst Blog


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Recently, Boston Scientific Corporation ( BSX ) announced its plans to acquire the Interventional Division of German healthcare major Bayer AG ( BAYRY ). The deal, valued at $415 million, is a step toward strengthening the company's foothold in the global peripheral interventions market. The acquisition is expected to close in the second half of 2014.

For several quarters now, Boston Scientific's worldwide peripheral business is growing 5% ahead of the market, driven by the company's huge success with balloons, stents and interventional oncology. Accordingly, the company is confident of its strategy to expand this business further. The company is optimistic about the impending acquisition of Bayer Interventional, which generated sales of $120 million in the last fiscal.

According to the company, apart from expanding its commercial footprint, Bayer Interventional will help Boston Scientific to create a complete portfolio of advanced line of solutions for the treatment of peripheral vascular disease. The acquisition will also enable Boston Scientific to access several vital segments in the peripheral space, including the atherectomy and thrombectomy categories.

Following the closure of the acquisition, Bayer Interventional will be integrated into Boston Scientific's existing Peripheral Interventions business under its Cardiovascular unit. For fiscal 2014, the company expects the acquisition to be neutral to its adjusted earnings per share, while for 2015, it is estimated to be accretive by a penny. However, acquisition-related charges as well as amortization will likely have a dilutive impact on 2014 GAAP earnings while it will have immaterial impact on 2015 earnings.

The peripheral interventions business of Boston Scientific markets devices used in peripheral vascular stenting and percutaneous transluminal angioplasty (PTA) procedures. These find use in the treatment of peripheral diseases (diseases which affect the blood vessels other than the heart and the biliary tree). Products include balloon catheters, stents, sheaths, wires and vena cava filters.

Currently, this business comprises 11.4% of its overall product portfolio. In the last reported quarter, sales in this segment were $204 million, up 5.7% year over year (up 5% at CER). Currently, the company is striving to strengthen its foothold in this business through innovation and acquisitions.

Boston Scientific plans to launch the drug-coated balloon platform in certain international markets in the second half of 2014. Also, the international launch of Vessix Renal Denervation System is expected in the near term. With the impending acquisition of Bayer Interventional, we expect the company to better overcome the pricing related challenges in the global peripheral interventional market. Boston Scientific currently carries a Zacks Rank #3 (Hold)

Other Stocks to Consider

Some better-ranked medical product stocks that are worth a look include Mead Johnson Nutrition Company ( MJN ) and ICU Medical, Inc. ( ICUI ). Both the stocks carry a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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