Boston Scientific Corporation (NYSE:BSX) has agreed to purchase Endo International for $1.6 billion divesture of the company’s American Medical System’s Urology Portfolio. This includes Endo’s men’s health and prostate health business. The purchase includes the $1.6 billion in cash to be paid along with another $50 million that is based on a milestone set for 2016 sales. The deal is expected to be finalized by the end of 2015. The portions of Endo’s business that BSX is buying have generated around $400 million in sales for the fiscal 2014 period. They also showed an operating income of $130 million for that same time frame. The deal is expected to add more than $50 million in yearly pre-tax synergies by the end of fiscal 2018. BSX is expecting to fund the deal through existing and future credit facilities.
The purchase gives BSX control of Endo’s AMS products that treat urologic conditions that include male stress urinary incontinence and erectile dysfunction. The men’s heath portfolio will be combined with BSX’s urology and woman’s health portfolio. Boston Scientific Corporation (NYSE:BSX) already has a strong offering of products for kidney stones, pelvic organ prolapse and abnormal uterine bleeding treatments. These additions will complete the rounding of the company’s offerings and offer a wider range of revenue generating assets. Endo is looking to speed up its entry and focus into the global pharmaceuticals industry and this allows them to streamline current operations to do so.
Endo’s offerings have seen a slowdown in their revenue generating efforts over the last year or so. The company reported a 2% slowdown in revenues for the fiscal year 2014 and the decline was attributed to a slowdown in its women’s health products. At the time, its men’s health offerings increased, but not enough to compensate for the slowdown in the women’s side.
The stock exploded to its current level and established a new all-time high for the issue. It needs to consolidate here and set a base before moving forward.