- Boston Scientific and Zimmer Biomet separately announced Tuesday a sale and acquisition, respectively offloading the BTG Specialty Pharmaceuticals business and buying cardiothoracic surgery company A&E Medical.
- Boston Scientific’s sale of the BTG business to European specialty pharmaceutical group SERB for $800 million completes its divestiture of recently acquired non-device assets. That sale price is less than the close to $1 billion referenced in a July Bloomberg report regarding a potential divestiture that cited people with knowledge of the matter.
- Zimmer is paying $250 million in cash, staggered across this year and 2021, to buy A&E for a suite of sternal closure devices it sees as complementary to its current offerings.
Despite uncertainty stemming from the coronavirus pandemic, M&A continues in the medtech industry.
Zimmer Biomet has made a series of tuck-in acquisitions in recent months. In return for $80 million upfront, Zimmer acquired Incisive for its operating room products and Relign to move deeper into the sports medicine and ambulatory surgery center markets.
The latest addition to the Zimmer business is A&E, a provider of cardiothoracic surgical products. In disclosing the deal, Zimmer focused on sternal closure products, including rigid fixation, sold by the newly acquired business. A&E secured 510(k) clearance for its Thorecon Rigid Fixation System early last year, setting it up to serve surgeons who need ways to stabilize and fix fractures of the anterior chest wall.
Zimmer said the sternal closure business is growing in the high single digits. The growth rate is in line with Zimmer’s goal of using takeovers to increase its weighted average market growth. Zimmer is paying $150 million at closing and $100 million next year for A&E.
That makes the deal larger than Zimmer’s other recent acquisitions but likely small enough to avoid the sort of integration issues that can blight medtech mergers, including its own takeover of Biomet. CEO Bryan Hanson is wary of such problems, telling investors last month he favors striking small deals because “it really eliminates that dis-synergy risk.”
Boston Scientific bought BTG for $4.2 billion last year. The deal gave Boston Scientific control of an interventional medicine business aligned with its existing operation, as well as a licensing operation and specialty pharmaceutical division that were outside of its core areas of focus.
Now, Boston Scientific is rid of both the non-core BTG businesses. After divesting the pharmaceutical licensing royalties in the fourth quarter of 2019, Boston Scientific began exploring the possibility of selling the specialty pharmaceutical business, which sells snake venom treatments.
Boston Scientific is set to sell the unit for $800 million. The sale to two SERB affiliates, coupled to the earlier divestiture of the licensing unit, will enable Boston Scientific to recoup more than $1 billion on the acquisition of BTG. The divestiture covers 280 employees and five facilities.
Once the deal closes in the first half of 2021, Boston Scientific will be left with just the interventional medicine aspect of the BTG business. Boston Scientific is still integrating the acquired assets and now expects to generate more than the targeted $175 million in cost savings.