Boston Scientific to buy BTG for 3.3 billion pounds, boosting peripheral interventions portfolio

Boston Scientific announced Tuesday an agreement to acquire BTG for 8.40 pounds ($10.79) per share in cash, or approximately 3.3 billion pounds ($4.2 billion), expanding its peripheral interventions portfolio with minimally-invasive treatments for cancers and vascular conditions. The transaction, which requires approval from BTG's shareholders and the UK court, is expected to close in the first half of 2019.

BTG has three main businesses, with the largest, dubbed interventional medicine, comprising several peripheral interventional product lines, such as the EKOS endovascular system for use in patients with pulmonary emboli, deep vein thrombosis and peripheral arterial occlusions. Boston Scientific noted that the UK company's interventional oncology franchise includes the TheraSphere Y-90 radiotherapy microspheres and the GALIL cryoablation system, used to treat patients with liver, kidney and other cancers.

Mike Mahoney, CEO of Boston Scientific, said "we are confident that the addition of these therapies to our portfolio will ultimately advance patient care in ways that could not be realised by either company alone, while also allowing us to realise substantial revenue and cost synergies and provide a strong return for investors."

The deal, which represents a premium of nearly 37 percent to BTG's closing share price on November 19, has been unanimously approved by the boards of directors of both companies. BTG said that the proposed merger has the support of Invesco Asset Management, Novo Holdings and Woodford Investment Management, which combined hold approximately 33 percent of its shares.

Earlier this month, BTG reported that sales in the first half of the year grew 12 percent versus the same period of 2017 to $496 million. Boston Scientific indicated that the purchase is expected to be two to three cents accretive to its adjusted earnings per share in 2019, and increasingly accretive thereafter.

Commenting on the deal, Shore Capital analyst Adam Barker said it is a good value for BTG's shareholders who have "witnessed a turnaround in BTG and see it develop into an interventional medicine company with a focused approach and growing portfolio." In September, BTG agreed to acquire Novate Medical for up to $150 million, gaining the latter's Sentry device for the prevention of pulmonary embolism. For related analysis, see The Wider View: BTG still on M&A trail but avoiding "data risks" after PneumRx sting.

Meanwhile, analysts at Jefferies called Boston Scientific's offer price "fair," adding that there is "a low likelihood of counterbids" due to BTG's "somewhat eclectic product mix." However, the analysts noted that "there has been competition for interventional oncology assets in the past," citing the recent acquisition of Sirtex Medical, which markets SIR-Spheres Y-90 resin microspheres for liver cancer, by Chinese asset manager CDH Investments, following an initial bid from Varian Medical Systems.

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