Boston Scientific has announced its acquisition of heart-device company Penumbra for approximately $14.5 billion in cash and stock. This transaction represents the largest deal for Boston Scientific in two decades, significantly expanding its portfolio in the cardiology sector. The acquisition is expected to close in the second half of 2024, contingent upon regulatory approvals.
Headquartered in California, Penumbra specializes in innovative technologies designed to treat various blood-flow conditions, including strokes and pulmonary embolisms. Boston Scientific’s cardiology division, which is predominantly located in Minnesota, has been keen to enhance its offerings in these critical areas. During an investor call on January 15, 2024, CEO Mike Mahoney expressed confidence that the acquisition would yield substantial value for both patients and shareholders.
“Penumbra is a great company,” Mahoney stated, highlighting its “highly differentiated portfolio of novel technologies” in high-growth markets where Boston Scientific currently lacks offerings. He also noted that the company’s extensive capabilities, including supply-chain experience and a vast global commercial footprint, would benefit the integration process.
This acquisition aligns with Boston Scientific’s long-standing strategy of leveraging mergers and acquisitions to drive growth. The current deal marks the company’s most significant transaction since its controversial purchase of Guidant, a pacemaker company, for $27 billion in 2006. That earlier acquisition led to substantial debt and legal challenges, but Boston Scientific has since rebounded to become one of the most profitable companies in the medical technology sector.
In early trading following the announcement, shares of Boston Scientific fell by over 4%, while Penumbra’s stock surged by more than 10%. According to analysts at J.P. Morgan, led by Robbie Marcus, the acquisition makes strategic sense but may face considerable scrutiny from investors due to its unexpected nature. The analysts noted that the deal positions Boston Scientific to access “best-in-class products” in rapidly expanding markets and provides opportunities for cross-selling and international expansion of Penumbra’s predominantly U.S.-focused business.
Penumbra, founded in 2004, employs approximately 4,500 staff and has established a presence in over 100 markets globally. The company reported revenue of $354.7 million for the most recent quarter, reflecting an 18% growth compared to the previous year. Its adjusted profit per share increased to 97 cents, up from 85 cents in the same quarter of the prior year.
Following the acquisition, Penumbra’s CEO Adam Elsesser will join Boston Scientific’s board of directors. He remarked on the cultural alignment between the two organizations, emphasizing that their combined strengths could accelerate growth. “We share similar cultures within our company and feel strongly that combining these strengths will further accelerate growth,” Elsesser stated.
As Boston Scientific moves forward with this acquisition, stakeholders will be closely monitoring its integration strategy and the potential impact on its broader operations within the global medtech landscape.
