Bovie Medical Corporation (NYSEMKT:BVX) is a prospective candidate for a takeover bid and / or a valuable licensing deal, as shown in a series of articles published here on Seeking Alpha over the past few years.
Medtronic and Boston Scientific are considered to be two of the top candidates for making a move on Bovie. Recent events at both of these companies have cleared up issues that may have provided impediments to taking action.
Announced this past June, the Medtronic - Covidien merger was consumated in late January. Involving a $50 billion transaction, this was no small deal, and completing the integration of the two companies is a challenge that will take quite some time to complete. However, with the merger date now than a month behind us, Medtronic is increasingly in a better position to undertake new deals, especially with smaller companies.
Although the situation Boston Scientific found itself in was rather different from that of Medtronic, the company's circumstances strongly limited its freedom of action.
A dispute with Johnson and Johnson relating to Boston Scientific's buyout of Guidant some years back led to Johnson and Johnson taking legal action against Boston Scientific. This past summer, it became clearer that the legal dispute between the companies was headed to trial rather than being settled out of court beforehand. With Johnson and Johnson seeking $7.2 billion in damages and interest, a Boston Scientific courtroom loss could be a near-death experience for the company (or perhaps even worse). After going through the full trial, the two parties reached an apparently last-minute $600 million settlement (to be paid in installments over the course of 2015), the judge's ruling being perhaps only days away.
On Monday, Boston Scientific announced it is purchasing Endo International's urology portfolio for $1.65 billion, to be financed out of existing and new acquired credit facilities. This is Boston Scientific's first major acquisition since the 2006 Guidant deal, likely a reflection of the size of the impact crater left by Guidant in the company's balance sheet.
After being forced into such a long drought of M&A activity while it extracted itself from the Guidant debris field, Boston Scientific is probably quite keen to get back in the game. With installment payments due to Johnson and Johnson later in the year, the taking on of more debt to finance the Endo International urology purchase, and the company being relatively cash-poor, future Boston Scientific purchases can be expected to be share-based if and when feasible.
Between Medtronic and Boston Scientific, Boston Scientific is perhaps the more likely of the two to make a move on Bovie for the simple reason that Medtronic is probably more distracted at the moment while it works on successfully integrating Covidien.
Although Medtronic and Boston Scientific are probably the two most likely companies to publicly court Bovie, other companies (e.g., Intuitive Surgical) are not to discounted as prospective suitors as previous articles have shown.
Disclosure: The author is long BVX.