August 20, 2007
NATICK, Mass — Boston Scientific Corp (BSC) announced that it entered into an agreement to amend its merger agreement with Advanced Bionics which it acquired in 2004, eliminating shared management provisions and modifying the schedule of earnout payments, and announced it has entered into definitive agreements to sell the Auditory business and drug pump development program to principals of Advanced Bionics. Advanced Bionics is the developer and manufacturer of the HiResolution Bionic Ear cochlear implant system.
The transactions must be approved by former Advanced Bionics shareholders who are entitled to earnout payments under the original merger agreement, and are subject to customary regulatory approvals. The transactions, which would also grant Boston Scientific sole management and control of the Pain Management business, are expected to close in January 2008. Following the closing of the transactions, the parties have agreed to dismiss currently pending litigation between Boston Scientific and former Advanced Bionics shareholders.
Under the terms of the agreements, the Auditory business and drug pump program will operate as Advanced Bionics under the leadership of Jeff Greiner, and will be headquartered in Valencia, California.
“We are very pleased that Advanced Bionics will continue serving the needs of the hearing impaired as an independent company,” says Greiner, currently head of the Neuromodulation Group at Boston Scientific and one of the principals purchasing the Auditory and drug pump businesses. “Advanced Bionics has always been a pioneer in developing innovative cochlear implant technology to treat severely and profoundly deaf children and adults. We look forward to building on our proud record of achievement in hearing health, and to further developing the implantable drug pump technology.”
“We are excited about the immediate and long-term growth opportunities presented by neuromodulation as an integral part of the company,” says Jim Tobin, president and CEO of Boston Scientific. “We hope to replicate the success of the pain management technologies across a wide spectrum of indications, expanding our microelectronic capabilities and strengthening our leadership in neuromodulation and cardiac rhythm management. The sale of the Auditory business and drug pump program is consistent with our previously announced objective of selling assets we do not consider core to our long-term strategy.”
The transaction provides a new schedule of consolidated, fixed earnout payments by Boston Scientific to former Advanced Bionics shareholders, consisting of $650 million payable upon closing in January 2008 and $500 million payable in March 2009. The Advanced Bionics principals will acquire a controlling interest in the auditory and drug pump businesses for an aggregate payment of $150 million at closing. The Company expects to record an estimated after-tax charge, primarily non-cash, of $360 million related to the transactions.
The Pain Management business Boston Scientific will retain includes spinal cord stimulation technologies, as well as emerging technologies such as the bion® microstimulator, that will position the Company well in the broader neuromodulation field. Boston Scientific currently has the number-two overall market position in pain management.
Source: HR Insider