Price Squabble Halts Sale of Boston Scientific Pain Unit

So much for a pain-free sale.

Boston Scientific Inc. is reportedly abandoning plans to sell its neuromodulation business due to price disagreements. The Natick, Mass.-based medical device behemoth had hoped to offload its neuromodulation unit for about $1.5 billion over the summer, but “advanced talks” with Stryker Corp. in August fell through after the companies could not agree on a price, according to Bloomberg.

The value of Boston Scientific’s neuromodulation unit also seemed to be a sticking point for Johnson & Johnson, Bloomberg reported. The world’s largest health products company considered purchasing the pain unit for slightly more than $1 billion but ultimately decided against it, two sources told Bloomberg. Other interested buyers were willing to spend between $1 billion and $1.5 billion for the business, three sources claimed.

Slow sales of cardiac stents, surgically implanted pacemakers and defibrillators over the last year have prompted Boston Scientific executives to diversify the company’s product line, cut expenses and refinance the debt it assumed in the 2006 purchase of Guidant Corp. Bigwigs spent much of 2010 soliciting buyers for the pain unit and stroke device businesses; in late October, Stryker Corp. agreed to buy the neurovascular unit for $1.5 billion in cash. Boston Scientific said it planned to use about half of the proceeds for acquisitions and the remainder for retiring debt.

Boston Scientific’s neurovascular business, which employs 1,150 people, is based in Fremont, Calif., and reported revenue of $348 million last year. The company first acquired the business in 1997 through its purchase of Target Therapeutics. That deal was valued at $1.1 billion.

Mark Paul, the current president of Boston Scientific’s neurovascular business, will continue to lead the unit after the acquisition closes (by the end of the year). The division provides medical technologies such as detachable coils, stents, and guidewires used in the treatment of neurovascular diseases.

“The sale of our neurovascular business is part of our overall strategic plan that will refocus our portfolio to, amongst other criteria, leverage existing sales forces with least invasive, cost and comparatively effective medical devices that reduce or eliminate refractory drug regimens,” said Ray Elliott, Boston Scientific’s president and CEO.