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Boston Scientific's $3.7 Billion Acquisition to Bolster Urology Business

On January 8, 2024, Boston Scientific, the prominent biomedical engineering company, made waves in the MedTech sector by announcing its acquisition of Axonics Inc, a California-based medical technology company, for a substantial $3.7 billion. This strategic move involves a cash payment of $71 per share, reflecting a 23.3% premium over Axonic's last closing price. Boston Scientific said the deal gave Axonics an equity value of $3.7 billion and an enterprise value of $3.4 billion. The market response was swift, with Axonics's share price surging by 20% to $68.99, while Boston Scientific experienced a modest uptick of 0.1%.

This acquisition by Boston Scientific is particularly noteworthy as it aims to fortify its presence in the urology business, an area in its portfolio that lacked a clear growth leader. Axonic's extensive portfolio of differentiated devices for treating urinary and bowel dysfunction is seen as a valuable addition. At a time when the global urology devices market is projected to grow from $40.41 billion in 2022 to $58.80 billion by 2030, this move positions Boston Scientific strategically for future opportunities. The anticipated growth in this market is attributed to factors such as the ageing population and the consequent rise in urological diseases like kidney stones, urinary incontinence, and benign prostatic hyperplasia.

The significance of this deal is underscored by Boston Scientific's entry into sacral neuromodulation, a potentially high-growth field in urology. By acquiring Axonics, a company with a 27% market share in sacral neuromodulation and 14,000 people implanted with its systems in 2022, Boston Scientific is poised to compete with industry players like Medtronic. Meghan Scanlon, President of Urology at Boston Scientific, views this acquisition as a strategic move to strengthen the company's position in a dynamic market.

This move aligns with Boston Scientific's recent trend of strategic acquisitions, such as the purchase of Relievant Medsystems for $850 million and the acquisition of Chinese medical technology company Acotec Scientific for about $523 million. These endeavours reflect the company's proactive approach to diversifying its portfolio and expanding revenue streams.

The financial outlook for Axonics is promising, with an expected net revenue of $366 million in 2023, indicating a substantial 34% increase compared to fiscal year 2022. While this revenue growth is anticipated to significantly benefit Boston Scientific's Urology business in 2024, it is crucial to note that the impact on GAAP earnings per share may be less accretive due to amortization expense and acquisition-related net charges. The deal is slated to conclude in the first half of 2024, with Shearman & Sterling advising Boston Scientific and J.P. Morgan Securities LLC advising Axonics through the acquisition process. As Boston Scientific continues its acquisition spree, this move positions the company for sustained growth in the evolving landscape of biomedical engineering and medical technology.

Written by: Mehak Mahajan

Sources: Reuters, Economic Times, Bloomberg, Fierce Pharma, Mergerlinks

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