Boston Scientific amends 2004 purchase

Boston Scientific amends 2004 purchase

	Published : Fri, 10 Aug 2007 00:00 By : Agencies Print this Story

BOSTON (AP) - Boston Scientific Corp. on Thursday said it has amended terms of its 2004 acquisition of a maker of implantable electronic medical devices, a deal worth potentially billions of dollars that led the acquired company's founder to sue over Boston Scientific's attempts to fire him.

The agreement reduces the potential payout Boston Scientific faces from its acquisition of Advanced Bionics Corp., and also would end all litigation between Boston Scientific and former Advanced Bionics shareholders including founder Alfred Mann, Boston Scientific said.

Under the pact, Boston Scientific would retain the California-based unit's pain management business.

Principal shareholders of Advanced Bionics would pay $150 million to buy back from Boston Scientific two businesses: one makes electronic devices to restore the hearing of deaf people, and the other is program to develop products to pump drugs within the body.

The transactions, expected to close in January, are subject to regulatory approval. They are also subject to approval by former shareholders of Valencia, Calif.-based Advanced Bionics who are entitled to earnout payments under the original merger agreement.

The agreement 'is consistent with our previously announced objective of selling assets we do not consider core to our long-term strategy,' said Paul Donovan, a Boston Scientific spokesman.

Boston Scientific has been under pressure to raise cash to pay off debt. Its stock recently hit a five-year low due to recent downturns in its two key heart device markets and investor concerns over debt from last year's $27 billion acquisition of Guidant Corp.

Boston Scientific made an initial $740 million payment after acquiring privately held Advanced Bionics, with additional compensation to be determined by the company's future performance. In a regulatory filing Thursday, Boston Scientific said it faced potentially $2 billion in additional payments.

Thursday's agreement provides a new schedule of payments to former Advanced Bionics shareholders, including $650 million payable upon the deal's closing and $500 million in March 2009. Boston Scientific plans to record an after-tax charge of $360 million related to the transactions.

Once the agreement closes, all parties agree to dismiss ongoing litigation, Boston Scientific said.

Under the 2004 acquisition, Boston Scientific agreed to give Mann shared control of his company after it became a subsidiary.

But Mann sued in federal court in Manhattan last year, accusing Boston Scientific of plotting to violate the agreement and trying to force him out. A judge granted an injunction to keep Mann in his position, and Boston Scientific appealed that ruling in May.

Thursday's agreement was announced after the company's shares rose 56 cents, or 4.2 percent, to $13.76.