1. Acquisition Boston Scientific – Guidant
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Fin 648 – Merger & Acquisitions

2. Porter: 5 Forces Analysis
FDA regulations are tough
Products litigation
More and more competitors
have entered the market
Promising businesses are bourgeoning
Current competitors acquire them with money
Hospitals group together to increase their power
Payers such as insurance companies ask for further tests
Different targets =
Contract manufacturers not yet consolidated =
Medical devices involve high-technology
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Fin 648 – Merger & Acquisitions

3. Fin 648 – Merger & Acquisitions
SWOT Analysis
Strengths
An aggressive acquisition strategy
R&D investments
Supply capacity, sales force and global presence
Strong financial Performance
Merger with Guidant
Weaknesses
Problems of quality controls and safety identified by the FDA.
Delayed or limited authorization to sell new products
Rise in debt
After Deal problems
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Fin 648 – Merger & Acquisitions

4. Fin 648 – Merger & Acquisitions
SWOT Analysis
Opportunities
Growth in healthcare spending
Threats
Intense Competition
Generic products
Bargaining power of buyers
Merger with Guidant – Conclusion
Opportunity in term of increase in revenue, diversification and expansion of the business.
Boston has to deal with many challenges.
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Fin 648 – Merger & Acquisitions

5. BCG Growth – Share Matrix Analysis
Scientific Cardiovascular
Scientific Express2TM Coronary
Stent System
Scientific Filter Wire EXTM
Guidant Interventional
Cardiology
Guidant Coronary Stent
Scientific Neuromodulation
Guidant Pacemakers
Guidant Implanted Defibrillators
Guidant Cardiac Surgery
Scientific Texus Stents
Scientific Coronary Stents
jdjsjdj
Guidant Bare-metal stent
Scientific Cardiac & Other
Vascular Surgery System
95% 80% 60% 40% 20% 10% 5% 0%
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Fin 648 – Merger & Acquisitions

6. Fin 648 – Merger & Acquisitions
Products/Operations
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Fin 648 – Merger & Acquisitions

7. Strategic Acquisitions
2 types of strategic acquisitions:
Result of the combination is far greater than the sum of the parts:
A&B (merged) > A+B (stand-alone)
Improvement of the profit margins of Newco
The core principal that runs through every example of successful M&A is integration. A strategic acquisition cannot be successful if not adequately integrated in the Newco.
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Fin 648 – Merger & Acquisitions

8. Elements for a Strategic M&A
Strategy
Acquire customers
No – GUIDANT is a competitor
Horinzontal Merger
Capitalize on a company strength
Yes. GUIDANT is a powerful business accelerator for BOSTON SCIENTIFIC.
Cover a weakness
BOSTON SCIENTIFIC becomes more diversified
Improving or completing a product line
A new line of business for BOSTON SCIENTIFIC with strong revenues.
Technology – build or buy?
BOSTON SCIENTIFIC acquires the GUIDANT technology
Acquisition to provide scale and access to capital markets
BOSTON SCIENTIFIC’s market cap : ~$18bn – GUIDANT’s Market Cap : ~$25bn
BOSTON SCIENTIFIC will become #1 in medical supplies industry.
Protect and expand mature product lines
Unknown.
Protect customer base from competition
BOSTON SCIENTIFIC will provide customers a more diversified offer.
Opportunistic acquisition for when the market turns
BOSTON SCIENTIFIC needs another business line to thwart this risk of Taxus being less profitable
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Fin 648 – Merger & Acquisitions

9. Fin 648 – Merger & Acquisitions
Conclusion
Benefits:
opportunity to increase revenues
diversification and expansion of the business
Challenges:
Legal issues
Benchmark the market
Lowers its cost to achieve its economies of scale
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Fin 648 – Merger & Acquisitions