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Bloomberg
Shares of Boston Scientific Corp fell the most in more than three years, after the medical device company said it would buy BTG Plc for 3.3 billion pounds ($4.2 billion).
While the deal will give Boston Scientific new products for the treatment of cancer and other disorders, it will add to the US company’s debt.
It also likely takes the company out of consideration as a takeover target itself, said Jefferies health-care strategist Jared Holz, who called it a “strange†move by the company.
Boston Scientific “has takeout speculation in shares and thus doing a deal will be a perceived negative as far as the stock is concerned,†Holz said in a note to clients. The shares fell as much as 11 percent, the biggest intraday drop since August 2015. They were down 6.1 percent to $33.15 at 9:56 am in New York.
Boston Scientific, a maker of stents that hold open damaged blood vessels, will pay 840 pence in cash per share, a 37 percent premium over BTG’s closing price, according to a statement. BTG surged as much as 35 percent, a record gain, reaching their highest level in almost four years in London trading.
BTG makes medical technology for physicians, such as cryoablation products to freeze and destroy diseased cells and radiotherapy that delivers radiation straight to tumors. The company also makes medicines and antidotes against snake venom for emergency care. BTG garnered $496 million in revenue in the first half of the year.
The acquisition “will augment our capabilities in important areas of unmet need†such as cancer and harmful blood clots, Boston Scientific Chief Executive Officer Michael Mahoney said in the statement.
The transaction would be funded with a combination of cash on hand and borrowing.