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Boston Scientific to Sell Bead Suit, Make Way for BTG Buyout

Zacks Equity Research

In its effort to accommodate the $4.2-billion colossal acquisition of BTG plc, Boston Scientific Corporation BSX is set to offload its certain non-prior businesses. The company has entered into an agreement to sell its portfolio of drug-loadable microsphere and bland embolic bead products to Varian Medical Systems for $90 million.

The divestment of oncology bead products is expected to be one of the last steps of the procedure to get Federal Trade Commission’s (FTC’s) approval for this huge buyout. Per Boston Scientific’s last update (in February) on the progress of the transaction, the company had noted that, FTC, through its “Second Request", is currently considering both BTG and Boston Scientific’s beads businesses.

Boston Scientific’s Beads Portfolio

Boston Scientific's embolization products like Oncozene, Embozene and Embozene Tandem products include micro beads or particles. The Contour PVA Embolization particles have been proven to be safe and effective in many clinical scenarios for decades. Going by a MEDTECHDIVE report of Jul 2, Boston Scientific's, embolization products reportedly brought in more than $21 million  in 2018. 

 

Per the announcement, Boston Scientific and BTG’s Bravo Bidco have individually agreed to put reasonable efforts to secure certain antitrust clearances and meet certain regulatory conditions as promptly as possible.

Proposed BTG Acquisition at a Glance

The acquisition of BTG is expected to considerably boost Boston Scientific's PI portfolio. BTG has three primary businesses, of which its Interventional Medicine portfolio, including various PI product lines, is the largest. The interventional oncology suite encompasses the TheraSphere Y-90 radiotherapy microspheres and the GALIL cryoablation system, which are used to treat liver, kidney and other cancer patients.

Furthermore, BTG's Interventional Medicine business also boasts a vascular portfolio, including filters, crossing catheters, microfoam and the EKOS Endovascular System.

Meanwhile, Boston Scientific has already received merger control clearances in Germany and Taiwan. BTG and Boston Scientific had earlier expected the transaction to close around mid-2019.  

Price Performance

Shares of Boston Scientific have outperformed its industry in a year's time. The stock has returned 26.1% compared with the industry's 7.4% increase.

Zacks Rank & Key Picks

Boston Scientific currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader medical space are Teleflex Inc. TFX, Penumbra PEN and Bruker Corporation BRKR, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Teleflex’s long-term earnings growth rate is expected to be 13.7%.

Penumbra’s long-term earnings growth rate is projected at 21.5%.

Bruker’s long-term earnings growth rate is estimated at 11.7%.

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