Boston Scientific, a Marlborough-based life sciences company, announced on Monday that it has agreed to acquire the urology division of American Medical Systems for $1.6 billion. Boston Scientific expects to close the acquisition in the third quarter of 2015. This will be the company’s largest acquisition since it purchased Guidant Corp, a manufacturer of cardiovascular products, in 2006 for $27.2 billion.
American Medical Systems (AMS), a division of Endo International, published reports last week that Boston Scientific was to close a deal with Endo for an unspecified AMS unit. The urology unit of AMS, based in Minnetonka, Minnesota, employs roughly 800 workers worldwide. It covers the men’s health and prostate health divisions of AMS. The unit is being sold for $1.6 billion up front, plus a potential for another $50 million based on the unit’s sales in 2016. Acquisition of the urology branch encompasses AMS products that treat erectile dysfunction, male urinary incontinence, and benign prostatic hyperplasia.
Boston Scientific (BSX) states the company’s technologies complement their portfolio of products that treat other urological conditions, including kidney stones, pelvic organ prolapse, female incontinence and abnormal uterine bleeding. This follows their purchase of Bayer AG and IOGyn last year. IOGyn, based in California, received FDA approval for a system treating uterine fibroids and polyps. AMS products that treat urology related issues in women will not be included in the deal.
Over the course of the previous year, the AMS unit generated $400 million in sales and adjusted operating income of about $130 million, with net income of around $60 million according to BSX. President and CEO of Boston Scientific, Mike Mahoney, expects the acquisition will create a business with annual sales of nearly $1 billion and will enable “strong future growth prospects through portfolio innovation and international market expansion.” BSX anticipates more than $50 million in annual pre-tax cost savings by the end of 2018 with boosted profits starting as early as 2016.
The announcement comes less than a month after an out-of-court settlement with competitor Johnson & Johnson. BSX paid $600 million to their rivals after Johnson & Johnson disputed their purchase of Guidant. The settlement avoided a $7.2 billion lawsuit filed by the rival company that had agreed to purchase Guidant before BSX acquired it for $27.2 billion.