Boston Scientific Gains After Report of Approach by Stryker

(Bloomberg) -- Shares of Boston Scientific Corp. surged after a report by the Wall Street Journal that it had been approached by Stryker Corp. about a deal between the two medical-device makers.

It’s unclear whether Boston Scientific is open to a takeover, the Journal said, citing sources it didn’t identify. Boston Scientific shares gained 8 percent to $34.50 at 3:11 p.m. in New York. Stryker shares were down 4 percent to $171.81.

A deal between the two companies would be the latest in a series of large acquisitions in the industry, which has been consolidating to win market share and to package sales to hospitals, doctors and health clinics.

Boston Scientific has a market value of almost $50 billion, and is best-known for its heart devices such as pacemakers and stents. Stryker manufactures orthopedic products like artificial hips and knees, and is valued at about $65 billion.

Combining the companies would let them wring costs out of efforts to sell products to a similar set of customers, and would give a combined firm more market power. Mergers by large health insurers have increased pressure on hospitals to lower expenses amid an ongoing debate about the cost of medical care in the U.S.

“As a matter of company policy, we do not comment on potential M&A,” Stryker’s Jon Zimmer said in an email. In a statement, Boston Scientific also declined to comment.

Competing Deals

Many of their largest competitors have already executed large takeovers in recent years.

Abbott Laboratories last year bought St. Jude Medical, which makes heart devices, for about $25 billion, then months later completed a takeover of medical testing and diagnostics supplier Alere for about $5 billion. Medtronic Plc bought Covidien, which makes surgical products, for about $46 billion in 2015.

“We don’t think Boston would be a willing seller without at least a 30 percent premium to recent trading, a reasonable range based on recent deals, which would put the price close to $40,” said Robert Marcus, an analyst with J.P. Morgan.

To contact the reporters on this story: Drew Armstrong in New York at darmstrong17@bloomberg.net;Cristin Flanagan in New York at cflanagan1@bloomberg.net

To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, Timothy Annett

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