Boston Scientific has entered into a definitive agreement with Endo International to acquire the American Medical Systems (AMS) urology portfolio for $1.6 billion in up-front cash and a potential additional $50 million milestone based on 2016 sales.
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The company expects to close the transaction in the third quarter of 2015, subject to customary closing conditions.
Upon completion of the transaction, the AMS Men's Health and Prostate Health businesses will become part of Boston Scientific Urology and Women's Health. The acquisition encompasses the AMS product portfolio for treating urologic conditions, including benign prostatic hyperplasia (BPH), male stress urinary incontinence and erectile dysfunction.
These technologies complement Boston Scientific's strong kidney stone, pelvic organ prolapse, female stress urinary incontinence and abnormal uterine bleeding treatment portfolios, and together, will provide customers with a comprehensive urology, urogynecology and gynecologic surgery portfolio.
The AMS women's health business for treating pelvic organ prolapse and female stress urinary incontinence is not included in the transaction.
Based in Minnetonka, Minn., the AMS Men's Health and Prostate Health businesses include approximately 800 employees worldwide, and generated 2014 sales of approximately $400 million and adjusted operating income of approximately $130 million, excluding amortization and certain allocated expenses. GAAP operating income, including amortization and certain allocated expenses, was approximately $60 million in 2014.
The acquisition is expected to result in annual pre-tax synergies in excess of $50 million by the end of 2018.On an adjusted basis, the transaction is expected to be breakeven to adjusted earnings per share in 2015, accretive by at least 3 cents in 2016, approximately 7 cents in 2017, and increasingly accretive thereafter.
The transaction is expected to be less accretive (or dilutive, as the case may be) on a GAAP basis 2015 through 2017, due to amortization expense and transaction and integration costs.
The acquisition is being structured as an asset purchase for tax purposes. Boston Scientific intends to finance the acquisition through a combination of existing and newly committed credit facilities. ■