Atritech is an emerging medical device company, focused on improving the quality of life for patients with atrial fibrillation (AF) by providing a permanent alternative to medications that help reduce the risk of AF related stroke. The deal is expected to broaden its portfolio of less-invasive cardiovascular devices.
The deal will boost Boston's business as it has been struggling with slumping sales, tight competition and falling product prices. The acquisition is believed to boost Boston sales and combat competition. The acquisition will see a fall in Boston's annual profit by 1 to 2 cents per share during the next three years and add to its profit starting 2014. The deal will reduce its profit by a penny per share in 2011 and 2012, excluding amortization charges.
Atritech developed the first device proved in a randomized clinical trial to offer an alternative to anticoagulant drugs -- which are associated with an increased risk of bleeding -- for patients experiencing atrial fibrillation who are at high risk for stroke called WATCHMAN. Both Atritech and Boston believe the WATCHMAN device offers the best alternative to oral anticoagulation medication for patients suffering from atrial fibrillation and are at high risk for stroke.
As of January 06, 2011 Boston has an enterprise value of $16.86 billion. It had a total cash in hand of $624 million and total debt of $6.04 billion with a $7.26 book value per share, according to its recent quarter. Boston's net sales for the third quarter of 2010 were $1.916 billion compared to $2.025 billion for the third quarter of 2009, a decrease of $109 million or five percent. Net sales for the first nine months of 2010 were $5.804 billion compared to $6.109 billion for the same period in 2009, a decrease of $305 million or five percent.
Boston Scientific will make an upfront payment of $100 million in cash and an additional potential payment of up to $275 million through 2015, upon the achievement of specified regulatory and revenue-based milestones through 2015. The purchase price assumes no cash and no debt on Atritech's balance sheet at closing.
The upfront payment is expected to be funded with cash on hand.
BSX took a dip of 1.64% or12 cent to $7.21 this morning after the news. The company had a 52 week high of $9.79 and low of $5.29. I believe the acquisition of Atritech will reinforce Boston Scientific's product offerings and strengthen its market share.
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