Boston Scientific Puts More Units Up for Sale

Boston Scientific said late Thursday it is looking to sell its cardiac surgery and vascular surgery units, this after previously announcing it is considering selling its fluid managment unit and some non-core assets. The San Jose-based cardiac surgery unit, acquired from Guidant Corp. in April 2006, produces equipment for less invasive heart surgery prodcedures. Sales are approximately $189 million. The Wayne, N.J.-based vascular surgery unit, acquired in 1995, makes synthetic grafts and patches to repair abdominal aortic aneurysms and peripheral vascular anatomy, and produces revenue of about $86 million. "We are in discussions with several potential buyers, and we expect the process to take a number of months," CEO Paul LaViolette said in a press release. The company is apparently launching the efforts in order to shore up its balance sheet, which has taken a hit amid slowdowns in its coated stent and implantable defibrillator businesses. The company’s debt ratings were recently fell to junk levels, although the New York Times writes it is in no immediate danger of running out of cash. Potential terms were not disclosed, but based on a modest multiple of sales, it could raise $600-$700 million, the Times writes. "Anything the company can do to cut costs, raise capital and help focus their business is good at this point," BMO analyst Joanne Wuensch told Bloomberg Thursday. "I don't think they have their backs against a wall, but there are some warning signals." Shares climbed 1.3% AH to $12.91.

Sources: Press release, MarketWatch, New York Times, Bloomberg
Commentary: Boston Scientific: A Buyout Waiting to Happen • The Long Case for Boston Scientific
Stocks/ETFs to watch: BSX. Competitors: JNJ, MDT, STJ
Earnings call transcript: BSX Q2 2007

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