Swiss company to buy former Boston Scientific unit Advanced Bionics

November 9, 2009 by MassDevice staff

Advanced Bionics, the California company Boston Scientific Corp. bought in 2004 and sold at a loss three years later, agreed to be acquired once again.

This time the suitor is Sonova Holding AG, a Swiss hearing aids and implants maker, which announced it will pay $480 million in cash for AB and its line of cochlear implants.

The deal concludes a five-year saga for Advanced Bionics and founder Alfred Mann.

In 2004, Boston Scientific spent $740 million for the Valencia, Calif.-based company. At the time, Advanced Bionics was posting roughly $50 million in annual sales of both its cochlear implants and a spinal cord neuro-stimulator that was making waves in the pain management arena.

When the companies cut the deal, Mann was told he could stay at the helm in Valencia; sweeteners built into the contract would have boosted the possible acquisition price to nearly $4 billion if Advanced Bionics reached $1 billion in annual sales within 10 years.

Officials at Boston Scientific were bullish on the agreement, telling analysts that Advanced Bionic sales could reach nearly $4 billion by 2010.

But just two years after the merger, then-BSX CEO James Tobin told Mann his services were no longer required. Mann balked, accusing Boston Scientific of plotting behind his back, and sued. He eventually settled for a portion of the company he founded.

All told, Boston Scientific paid former shareholders of Advanced Bionics $650 million, making the final, $500 million installment in March. AB shareholders in turn paid Boston Scientific $150 million to buy back the company's auditory business.

That business is slated to fetch nearly three times Boston Scientific's fire-sale price.

Advanced Bionics said it had $117 million in sales in 2008, meaning Sonova will pay a multiple of about a 4.1 times revenues. The Swiss company said it expects the deal will start to pay off in three to five years.

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