Boston Scientific ($BSX) sat out most rounds of med tech M&A the past few years, but the device giant might be charting a different course in 2015. The company is reportedly close to buying Endo International's ($ENDP) AMS medical device unit in a deal estimated at $2 billion.
People familiar with the matter told Reuters that the companies are aiming to finalize an agreement within a matter of weeks, but discussions are continuing and could still fall apart. Boston Scientific and Endo are staying mum on details, but the deal would give Boston Scientific access to Endo's devices to treat pelvic disorders.
Buying up Endo's AMS unit would also end a near decade-long dealmaking drought for Boston Scientific, as the company has not made a large acquisition since its $27 billion purchase of heart device maker Guidant in 2006. The deal came with its fair share of problems, saddling Boston Scientific with debt, a heap of product recalls and a breach-of-contract lawsuit against rival Johnson & Johnson ($JNJ). The Marlborough, MA-based company recently settled the score with J&J over its Guidant purchase, agreeing to pay $600 million to lay its ongoing courtroom saga to rest.
But Boston Scientific is no stranger to M&A, recently concentrating on smaller, bolt-on acquisitions to diversify its portfolio and gain ground in growing markets. In May 2014, the company snatched up California startup IoGyn for $65 million to get its hands on the company's products for minimally invasive gynecological surgery. A week later, Boston Scientific said it would shell out $415 million for Bayer's interventional division to bulk up its peripheral vascular product portfolio.
Endo also stands to benefit from a deal with Boston Scientific, as it tries to shed some noncore businesses and chart growth through new acquisitions. Last year, the Minnetonka, MN-based company purchased Canadian specialty drugmaker Paladin Labs for $1.6 billion, allowing the company to move its domicile from Pennsylvania to Ireland to enjoy lower corporate tax rates. In January 2014, Endo announced that it would sell the remainder of its unwanted urology device business HealthTronics to Altaris Capital Partners in a deal worth up to $130 million. In June, Endo bought Dava Pharmaceuticals for $600 million to expand its generic drug portfolio.
Meanwhile, Endo continues to settle claims related to vaginal mesh implants. In April, the company said it would pay $830 million to resolve a "substantial majority" of its vaginal mesh-related cases. In October, Endo agreed to pay an additional $400 million to cover the remaining claims over vaginal mesh products. The company plans to fund the payments through 2017, settling more than 10,000 suits for an average of $48,000 apiece.
The deal also comes as Boston Scientific's fellow med tech heavyweights forge their own M&A deals. Medtronic ($MDT) recently closed its $42.9 billion purchase of Covidien, shifting its domicile to Ireland for tax-paying purposes while pledging to invest an additional $10 billion in the U.S. Last year, Zimmer ($ZMH) said it would shell out $13.4 billion for Biomet to gain orthopedics prowess. The companies expect to close the deal by the end of Q1 2015.