Boston Scientific is purchasing heart-device company Penumbra for roughly $14.5 billion in cash and stock, marking the largest deal in two decades for the medtech company with a large Minnesota presence.
Penumbra, based in California, makes technology treating several blood-flow conditions such as stroke and pulmonary embolism. Boston Scientific’s cardiology division is primarily based in Minnesota.
Boston Scientific CEO Mike Mahoney said during a call with investors Jan. 15 he is confident the deal will bring value to patients and shareholders. He expects the acquisition to close by the second half of the year, pending regulatory approvals.
“Penumbra is a great company,” Mahoney said, “with a highly differentiated portfolio of novel technologies that operate in high-growth segments where Boston Scientific lacks offerings. ... Boston Scientific brings broad capabilities including supply-chain experience, expertise and a significant global commercial footprint.”
Boston Scientific has long used mergers and acquisitions to fuel growth. This deal appears to be the company’s largest since its troubled acquisition of Arden Hills pacemaker company Guidant in 2006 for $27 billion. The company recovered from debt and legal troubles associated with that deal to become one of the most profitable medtech companies in the world while maintaining a huge Minnesota operation.
Boston Scientific’s stock price was down more than 4% in early trading Thursday, while Penumbra shares had ballooned more than 10%.
J.P. Morgan analysts led by Robbie Marcus said in a note to investors that the acquisition makes “a good deal of sense” despite their expectation that it will draw “significant investor scrutiny” as it comes as a surprise.
The J.P. Morgan note said the deal gives Boston Scientific access to “best-in-class products” in fast-growing markets, cross-selling opportunities and the chance to globalize Penumbra’s predominately U.S.-based business.
