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Stryker may be candidate for Boston Sci neuromodulation biz

This article was originally published in The Gray Sheet

Executive Summary

Stryker is reportedly in talks to acquire Boston Scientific's neuromodulation business for about $1.5 billion, although neither firm has publicly confirmed the discussions. Bloomberg reported Aug. 17 that the talks were in "advanced" stages. The Boston Sci neuromodulation biz, which makes spinal cord stimulation implants for pain management, would make "a good strategic fit" for Stryker's roughly $600 million spinal implant business and smaller pain management business, Wells Fargo Securities analyst Michael Matson said in an Aug. 18 report. Boston's neuromodulation sales increased 17% to $285 million in 2009. Reports first surfaced in April that Boston was considering selling its neuromodulation and neurovascular businesses. While neuromodulation has been Boston Scientific's fastest growing unit, the company may be willing to sell because of competitive pressures from Medtronic and St. Jude Medical and the investment that would be needed to catch up, some analysts say 1("The Gray Sheet" April 19, 2010)

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Firm is reportedly exploring plans to sell its neuromodulation and neurovascular businesses. A sale of both divisions could raise about $2 billion to aid debt repayment, Wells Fargo Securities analyst Larry Biegelsen suggests in recent report. The businesses generated 2009 sales of $285 million and $348 million, respectively. The neuromodulation division is Boston Scientific's fastest growing unit, but the firm may be willing to sell "because it is falling behind" competitors Medtronic and St. Jude Medical, "and it requires significant investment to reach its growth potential," Biegelsen said. Potential neuromodulation buyers include Johnson & Johnson and Abbott, while candidates for the neurovascular biz include Medtronic, St. Jude, Bard and Covidien, according to Biegelsen. Boston Scientific said in February it planned to divest several product lines over the next two years (1"The Gray Sheet" Feb. 15, 2010)

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