Informed sources have told TheMarker.com that Israeli hi-tech may soon post a new record if
(NYSE:BSX) is as close as believed to signing a deal to acquire the rest of stent supplier Medinol.
Sources say that the deal could be finalized by midnight local time. Both parties are expected to make an announcement to that effect before trading opens tomorrow.
It is believed that Boston Scientific will pay $1.5 billion to $2 billion in exchange for a 64% stake in Medinol, reflecting a company value of $2.3 billion to $3.1 billion. Boston Scientific had acquired a minority interest in Medinol in 1996, at a company value of $360 million.
Medinol, which is controlled by Kobi Richter and his wife Judith, makes stents that are used to prop open clogged heart arteries after cardiac surgery. Boston Scientific is Medinol's chief client.
The expected deal follows months of negotiation during which Richter is said to have tried get a much higher price for his firm.
said that Richter had asked for $8 billion. It is believed that Medinol's annual earnings come to $100 million, and that its sales total $350 million.
yesterday upgraded its rating on Boston Scientific to Neutral. The bank said that the Medinol deal could be effected primarily in cash and that the stock-swap component would probably be minimal.
In addition, the bank pointed out that in order to finance the largely cash-based deal, Boston Scientific will have to take out large loans that will weigh heavily upon its financing expenses in years to come.
Boston Scientific's results for the third quarter of 2000 show that the company has just $50 million in its coffers. The firm's current market value is $6.3 billion.
By acquiring Medinol, Boston Scientific will ensure control over its main stent supplier. The acquisition will save Boston Scientific the need to develop its own line of stents.
Kobi and Judith Richter had been systematically increasing their holdings in Medinol, and had acquired the stakes of minority shareholders at a company valuation in the range of $150 million to $400 million. The Richters bought shares that had belonged to the venture capital fund Polaris, as well as those formerly held by scientist Gregory Pinhasik, co-developer of the Medinol patent.
is reporting that Kobi Richter has been negotiating via his auditor with the Israeli income tax authorities, hoping to slash his tax bill from 50% to 25%.