Boston Scientific shares jump on report of takeover approach

Takeover by rival Stryker would give combined firm greater market power

The Boston Scientific plant in Galway. The medical devices manufacturer  has a market value of almost $50 billion and generated $9.05 billion in net sales last year. Photograph: Joe O’Shaughnessy.

The Boston Scientific plant in Galway. The medical devices manufacturer has a market value of almost $50 billion and generated $9.05 billion in net sales last year. Photograph: Joe O’Shaughnessy.

 

Boston Scientific shares jumped 17 per cent at one point on Monday after a media report that Stryker had made an approach to purchase the rival maker of medical devices.

A deal between the two companies would be the latest in a series of large acquisitions in the industry, which has been consolidating to win market share and to package sales to hospitals, doctors and health clinics.

It’s unclear whether Boston Scientific is open to a takeover, the Wall Street Journal said, citing sources it didn’t identify.

Boston Scientific has a market value of almost $50 billion, and is best-known for its heart devices such as pacemakers and stents. It generated $9.05 billion in net sales last year.

Stryker manufactures orthopaedic products such as artificial hips and knees, and is valued at about $65 billion. Combining the companies would let them wring costs out of efforts to sell products to a similar set of customers, and would give a combined firm more market power.

Mergers by large health insurers have increased pressure on hospitals to lower expenses amid an ongoing debate about the cost of medical care in the United States.

Shares in Boston Scientific shares came back from those early highs to trade up 7 per cent to $34.22 at 11:07am in New York. Stryker shares were down 2.9 per cent to $173.70.

Takeovers

Many of their largest competitors have already executed large takeovers in recent years. Abbott Laboratories last year bought St Jude Medical, which makes heart devices, for about $25 billion. Months later, Abbott completed a takeover of medical testing and diagnostics supplier Alere for about $5 billion.

Irish-domiciled Medtronic bought Covidien, which makes surgical products, for about $46 billion in 2015.

Boston Scientific lags behind Medtronic and Edwards Lifesciences in the heart valves market and has pinned its hopes on its updated Lotus device, set for launch in 2019, following the withdrawal of an earlier version from Europe last year.

“As a matter of company policy, we do not comment on potential M&A,” Stryker’s Jon Zimmer said in an email. A representative for Boston Scientific didn’t immediately respond to a request for comment.

Both companies have a significant presence in the Irish market. – Copyright The Financial Times Limited 2018/Bloomberg/Reuters