Boston Scientific Scoops Up C.R. Bard’s EP Division

Boston Scientific Corp. is acquiring the electrophysiology (EP) business of Murray Hill, N.J.-based C. R. Bard for $275 million in cash. The purchase will expand the Natick, Mass.-based firm’s role in treating abnormal heartbeats. Bard’s EP business had nearly $111 million in sales last year. The unit employs about 180 people worldwide.

The Bard division, based in Lowell, Mass., manufactures medical equipment, catheters and accessories. Boston Scientific will merge the Bard unit with its own rhythm management business, one of three global reporting units created under a restructuring announced in January. Its rhythm management business is best known for making pacemakers and implantable defibrillators. The other two segments are cardiovascular and medical surgery.

The acquisition is part of Boston Scientific’s effort to shore up its rhythm management business, where sales dropped 5 percent in the first quarter. According to company officials, there is a $2.5 billion worldwide market for electrophysiology that is growing 10 percent annually.

Analysts seemed to agree. In a note to investors, Kevin Strange, an analyst for Wells Fargo, wrote that the acquisition will give Boston Scientific 11 percent market share and move up in the global electrophysiology market from fourth to third position.

“We expect [Bard’s] strong portfolio of diagnostic catheters to be complementary to [Boston Scientific’s] portfolio of therapeutic catheters, and geographically, [Bard] has a strong presence outside the U.S., whereas [Boston Scientific] has a stronger presence in the U.S, which we expect to also be complementary,” Strange wrote. “Overall, we think the acquisition is strategically sound and consistent with [Boston Scientific’s] stated desire to reinvigorate their EP business.”

Boston Scientific, which reported a first-quarter loss of $354 million on revenue of $1.8 billion, said the deal should close later this year and will not affect its adjusted earnings per share for the current fiscal year, although it will be dilutive to GAAP earnings.
Boston Scientific’s leadership is bullish on the prospects.

“We believe the innovation and global reach that Bard EP delivers will meaningfully advance our position in this fast-growing market,” said Boston Scientific CEO Mike Mahoney.

Timothy Ring, chairman and CEO of Bard said the move in line with this firm’s growth plans.

“This divestiture is consistent with our strategic plan, which is designed to position our portfolio for accelerated sales growth over time,” he said in a prepared statement. “By exiting the EP business, we believe we can better direct management’s attention and our capital resources toward pursuing opportunities where we believe we can achieve sustainable long-term leadership positions and provide attractive growth and returns to shareholders.”