Boston Scientific shares fall on £3.3bn BTG deal

Company employs more than 3,000 people across State

The Boston Scientific plant in Galway. The company employs people in Galway, Cork and Clonmel. Photograph: Joe O’Shaughnessy

The Boston Scientific plant in Galway. The company employs people in Galway, Cork and Clonmel. Photograph: Joe O’Shaughnessy

 

Boston Scientific shares fell the most in more than three years on Tuesday, after the medical device company said it would buy BTG for £3.3 billion (€3.7 billion).

Boston Scientific employs more than 3,000 people in Galway, Cork and Clonmel.

While the deal will give Boston Scientific new products for the treatment of cancer and other disorders, it will add to the US company’s debt. It also likely takes the company out of consideration as a takeover target itself, said Jefferies health-care strategist Jared Holz, who called it a “strange” move by the company.

Boston Scientific “has takeout speculation in shares and thus doing a deal will be a perceived negative as far as the stock is concerned”, Mr Holz said in a note to clients.

The shares fell as much as 11 per cent, the biggest intraday drop since August 2015. They were down 6.1 per cent to $33.15 (€29.12 ) in morning trading in New York. Boston Scientific, a maker of stents that hold open damaged blood vessels, will pay 840 pence in cash per share, a 37 per cent premium over BTG’s Monday closing price, according to a statement.

Record gain

BTG surged as much as 35 per cent, a record gain, reaching their highest level in almost four years in London trading.

BTG makes medical technology for doctors, such as cryoablation products to freeze and destroy diseased cells and radiotherapy that delivers radiation straight to tumours.

The company also makes medicines and antidotes against snake venom for emergency care. BTG garnered $496 million in revenue in the first half of the year. The acquisition “will augment our capabilities in important areas of unmet need” such as cancer and harmful blood clots, Boston Scientific chief executive officer Michael Mahoney said in the statement.

Cash and borrowings

The transaction would be funded with a combination of cash on hand and borrowing. Boston Scientific said it would likely add two to three cents to its adjusted earnings per share next year and more thereafter.

Investors with 33 per cent of BTG’s outstanding shares have pledged to vote in favour of the deal, the company said. - Bloomberg