Is J&J in the hunt for Boston Scientific?

September 15, 2011 by MassDevice staff

The installation of Johnson & Johnson's top medical device exec as bitter rival Boston Scientific's new CEO could signal the conglomerate's interest in acquiring BSX, according to a Wall Street analyst, and there's a spate of other potential targets to consider.

Johnson & Johnson
Boston Scientific

Could the amicable deal between bitter rivals Johnson & Johnson (NYSE:JNJ) and Boston Scientific (NYSE:BSX) over Michael Mahoney leaving J&J to helm BSX signal an upcoming acquisition?

Opinions are divided on Wall Street, with at least one analyst wondering if a deal could be in the works and others casting doubt on the speculation.

In a late-breaking announcement Sept. 13, Boston Scientific said Mahoney will become president effective Oct. 17 and take the corner office in November 2012. The unusual transition period allows Mahoney to learn the business and also helps side-step any anti-competition covenants in his contract with J&J. The news came as a surprise given the duo's long-standing battles over the drug-eluting coronary stent market, which Johnson & Johnson pioneered – only to see BSX emerge with the leading market share.

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The amity might indicate that J&J is ultimately interested in buying its smaller peer, according to Wells Fargo analyst Larry Biegelsen. The "friendly agreement" that's sending Mahoney to BSX's Natick, Mass. HQ could "fuel additional speculation" that a merger is afoot, Biegelsen wrote in a note to investors yesterday.

Other analysts on The Street were not so sure.