Boston Scientific–Advanced Bionics Deal Restructured

NEWS TRENDS

It appeared to be a marriage made in heaven when it happened in 2004. Boston Scientific was one of the fastest-growing large device companies, and newly flush with cash from the introduction of its blockbuster drug-eluting stent, Taxus. Advanced Bionics was a major player in the up-and-coming field of neurostimulation, which has tremendous market potential. When they joined forces, the combination of Boston Scientific's money with Advanced Bionics' technology and potential appeared formidable.

But the deal has yet to live up to its billing. Boston Scientific executives clashed with Alfred Mann, founder of Advanced Bionics, who retained some control over his creation under the terms of the deal. Eventually Boston Scientific tried to force him out, only to be blocked from doing so when Mann went to court.

In August, the parties finally agreed to settle their differences, eliminating shared management provisions and modifying payment schedules. Boston Scientific took sole control of Advanced Bionics' pain management division, and will pay former Advanced Bionics shareholders $1.15 billion over two years to do so. It will sell off the auditory and drug-pump businesses to Advanced Bionics principals for $150 million. Once the transactions close, lawsuits between the two entities will be dropped. And then perhaps both parties, freed from the burden of working with each other, can get back to taking advantage of the technology's potential.

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