Stryker Makes Offer to Buy Boston Scientific, Sources Say
In yet another potentially massive shakeup within the medical device industry, Michigan-based Stryker Corp. has offered to buy Boston Scientific Corp., sources close to the deal informed the Wall Street Journal on Monday.
While both companies have declined to comment about the validity of the acquisition, but the possibility quickly sent investors and analysts into a fervor.
Boston Scientific, which is headquartered in Marlborough, Massachusetts but employs about a quarter of its roughly 27,000 workers in Minnesota, saw its shares jump about 7.5 percent during Monday trading, pushing its market value above $47 billion. Stryker felt the opposite effect as its shares shrunk more than 5 percent upon news of the deal and its market capitalization dropped to about $63 billion.
Based on 2017 sales, Boston Scientific and Stryker would have a combined revenue of $21.5 billion and would create a “higher growth Medtronic,” according to Vijay Kumar, a health care and technology analyst at investment banking firm Evercore. (For reference, Medtronic reported $29.7 billion in revenue last year.)
Wells Fargo analyst Larry Biegelsen said he was “surprised” by the news and wondered if other offers would be made for Boston Scientific, Seeking Alpha reported. Analyst Bruce Nudel of Atlanta-based banking system SunTrust added that Stryker’s alleged deal made sense “on the surface,” as it would combine Stryker’s strong hospital infrastructure with Boston Scientific’s large portfolio of implantable devices.
By and large, Boston Scientific is known best for its heart devices such as pacemakers and stents. Meanwhile, Stryker has a strong reputation for its array of artificial hips and other orthopedic products.
If Stryker’s offer for Boston Scientific is true, it’s expected to be one of the largest deals in the medical device industry’s history. A number of deals of comparable scale have taken place in the last several years, including Becton Dickenson’s $24 billion buyout of CR Bard last year; Abbott Laboratories’ $23.7 billion deal in 2016 for former Minnesota Fortune 500 company St. Jude Medical; and the biggest of them all: Medtronic’s nearly $50 billion agreement to buy Covidien in 2014.
Moreover, Stryker and Boston Scientific are by no means unfamiliar with each other when it comes to mergers and acquisitions. A few days before Halloween 2010, Stryker made a $1.5 billion deal to assume control of Boston Scientific’s neurovascular business.
Additionally, Stryker has been recently active in Minnesota’s medical technology scene. Near the end of 2017, the company acquired Entellus Medical, a Plymouth-based maker of minimally invasive devices used to treat nasal airway obstructions, for $664 million.