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Boston Scientific to Buy EndoChoice, Boost Endoscopy Line


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In an effort to boost its endoscopy business, medical device major, Boston Scientific (BSX - Analyst Report) recently entered into a definitive agreement to acquire EndoChoice Holdings, Inc. (GI - Snapshot Report) . The deal has been inked at a total equity value of approximately $210 million.

Boston Scientific will launch a tender offer for all outstanding shares of EndoChoice at a cash price of $8.00 per share. The transaction is expected to close in the fourth quarter of 2016, subject to certain closing conditions.

Atlanta, GA-based EndoChoice works on platform technologies, including endoscopic imaging systems, devices and infection control products and pathology services for specialists, which are helpful in treating various gastrointestinal conditions, including colon cancer. The company’s products and services include single-use devices, such as resection and retrieval devices, needles, graspers and infection control kits. It also caters to pathology services and imaging technologies. 

According to Boston Scientific, post the completion of this acquisition, EndoChoice’s vast portfolio will be integrated with its Endoscopy division. This will therefore enable the company to provide better comprehensive gastroenterology solutions. This should also expand Boston Scientific’s foothold in the new categories within the endoscopy market.

Financial Benefits

The inclusion of EndoChoice that generated revenues of $75 million over the last fiscal year, is expected to be breakeven to Boston Scientific’s adjusted earnings per share in 2017 and accretive thereafter.

We note that Boston Scietific continues to perform well in its Endoscopy business. The company’s single-use SpyGlass DS visualization system, the AXIOS stent for drainage of pancreatic fluid and next-generation hemostasis clip – the Resolution 360 were the key factors that drove sales growth in this business division in the last reported second quarter.

Management was particularly upbeat about the high-single-digit growth in this business’ U.S. franchise, while overseas too, the unit delivered strong double-digit growth. Management was further encouraged to note consistent strong growth in the core Endo business, on the back of this business’ innovative portfolio and broad-based global expansion initiatives.

Going ahead, management is determined to continue to innovate in endoscopic ultrasound and other exciting therapeutic categories including pulmonary and oncology to further enhance the company’s global leadership in endoscopy. We believe the latest acquisition, post closure, will further boost the company’s growing Endoscopy business worldwide.

Two other stocks that warrant a look in the gastrointestinal market are Medtronic plc (MDT - Analyst Report) and Abbott Laboratories (ABT - Analyst Report) .

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