Citing three people familiar with the situation, Bloomberg reports that Stryker is in talks with Boston Scientific to acquire its neuromodulation unit, which makes pain-management devices, for up to $1.5 billion in cash. The talks are in late stages and a deal could be announced as early as next week. Stryker already has a back pain management business and Cannacord Genuity analyist William Plovanic notes that the Boston Sci acquisition would compliment Stryker's current offerings. The neuromodulation group has annual revenues of about $285 million.
Boston Scientific is attempting to deal with stagnant sales of stents and devices to treat irregular heartbeats--its biggest moneymakers. In an effort to trim its business, the company said earlier this year that it would explore the sale of both its neuromodulation and neurovascular units. The neurovascular group makes stroke-prevention devices and had U.S. sales of $348 million in 2009. Bloomberg adds that a sale for that business is a few weeks away. It's expected to sell for about $1 billion.
"They have to do everything they can to optimize growth for the long run," Leerink Swan analysit Frederick Wise tells Bloomberg. "So why not thoughtfully prune the current portfolio and double down in areas where you have the most confidence of your opportunities." Earlier this year Boston Scientific laid off 1,300 people, or about 10 percent of its non-manufacturing staff.
- take a look at the Bloomberg article for more