Boston Scientific may spin off stake

Boston Scientific may spin off stake

	Published : Mon, 12 Mar 2007 23:48 By : Agencies Print this Story

BOSTON (AP) - Boston Scientific Corp. said Monday it's considering selling a minority stake in its endosurgery group, a move that could draw attention to the unit's growth and help pay off debt while the medical device maker's stock struggles to recover from a $27 billion acquisition.

After the company's shares closed down nearly 4 percent, Boston Scientific said its board of directors gave management permission to explore an initial public offering of a stake of anywhere from 18 percent to 25 percent of the endosurgery group. The review is expected to take six to 12 months, with any IPO occurring in late 2007 or early 2008.

Boston Scientific would remain majority owner of the unit, which develops devices to treat a variety of digestive, urological and gynecological disorders as well as certain cancers.

The group is expected to generate $1.4 billion in revenue in 2007, nearly one-fifth of the revenue at a company best known for its heart stents and defibrillators. The unit has posted annual revenue growth of about 12 percent over the past eight years.

'Here is a business that is overshadowed by the cardiovascular business, and yet it is a jewel,' Jim Tobin, Boston Scientific's president and chief executive, told analysts in a conference call.

Natick-based Boston Scientific said an IPO could generate more than $1 billion to accelerate repayment of debt that stood at more than $7 billion at the end of last year.

The 28-year-old company took on that debt last year when it made its biggest-ever acquisition, a $27 billion purchase of Guidant Corp. that closed last April.

Boston Scientific's stock sank to a four-year low last fall, and it has continued to struggle over concerns about debt load, combined with legal liability from the Guidant deal and downturns in markets for two key heart devices.

'Now that the dust is starting to settle in terms of the acquisition and the integration, the question becomes what do you do next,' Piper Jaffray analyst Thom Gunderson said. 'Access to capital is always an important activity, and it's a little trickier for them (Boston Scientific) these days.'

Boston Scientific's endosurgery unit 'is basically invisible to Wall Street,' Gunderson said.

Boston Scientific announced its plans for the possible IPO after its shares fell 61 cents to close at $15.16 on the New York Stock Exchange, near the bottom end of the stock's 52-week range of $14.43 to $23.96.