Boston Scientific Corp. (NYSE:BSX) hired Bank of America Corp. (NYSE:BAC) to help it find buyers for two of its business units, according to multiple reports.
The Natick, Mass.-based medical device maker is looking to move its Target Therapeutics and neuromodulation business units, according to the Bloomberg news service, which cited an unnamed source with knowledge of the deal.
Officials at Boston Scientific declined to comment on the reports, which come a week after speculation that the recent shutdown of its defibrillator operations might force the firm to sell off assets to offset a potential $470 million loss stemming from the ICD hold.
Rick Wise, an analyst at New York investment bank Leerink Swann, wrote in a note to investors that if the rumors are true, a deal for the units, which had combined sales of $633 million in 2009, could be a net positive for Boston Scientific.
Wise said a deal could either help BSX pay off the $1.75 billion in debt that comes due in early 2011, or at least give it flexibility in refinancing. The deals could also “represent a longer-term strategic portfolio decision by [CEO] Ray Elliott, whereby BSX narrows its end-market focus and works to stabilize and regrow its larger, more significant franchises,” Wise added.
BSX acquired its neurovascular intervention business, Target Therapeutics Inc., in 1997 for $1.1 billion. The unit makes disposable and implantable devices to treat diseased, ruptured or blocked blood vessels in the brain.
The company’s neuromodulation unit, which markets the Precision spinal cord stimulation system, used in the management of chronic pain, is a holdover from BSX’s $740 million Advanced Bionics Corp. acquisition in 2004.
The company sold the Valencia, Calif.-based company for a loss just three years after completing the merger, but held on to the neuromodulation business to compete in the growing chronic pain management market.
The division brought in about $285 million in sales during 2009, a 17 percent increase from 2008. Despite the revenue jump, the unit has taken a long time to live up to the promise that had at one time sparked a bidding war between BSX and rival Johnson & Johnson (NYSE:JNJ) over Advanced Bionics six years ago.
JNJ could be a potential suitor for the unit, if it is indeed on the market, according to the Reuters news service.
Selling off the neuromodulation unit would be a bit of a surprise, as BSX has continued to invest heavily in the business. In February, company officials announced the start of a clinical trial to “assess the therapeutic effectiveness and cost effectiveness of spinal cord stimulation compared to re-operation in patients with failed back surgery syndrome,” according to regulatory documents. The officials said that they felt the trial could lead to earlier adoption of the stimulator in patients with chronic pain.
Boston Scientific is also set to introduce two new neurostim products during 2010 and recently moved the unit into a new “state-of-the-art facility.”