Boston Scientific Shares Fall on $14.5B Penumbra Acquisition
Investors weigh long-term entry into the high-growth stroke care market against the deal's significant cost and near-term earnings dilution.
Boston Scientific (NYSE: BSX) shares fell sharply in trading Tuesday after the medical device giant announced a definitive agreement to acquire Penumbra, Inc. (NYSE: PEN) in a cash-and-stock deal valued at approximately $14.5 billion. The move marks a significant strategic push into the fast-growing neurovascular and peripheral vascular markets, particularly in stroke care.
The acquisition, one of Boston Scientific's largest to date, was met with immediate investor concern over its price tag and financial structure. Shares of BSX dropped nearly 6%, wiping out over $8 billion in market capitalization. In contrast, shares of Penumbra surged on the news, reflecting the premium offered.
Under the terms of the agreement, the $14.5 billion transaction will be financed through a combination of 73% cash and 27% stock. Boston Scientific plans to fund the roughly $11 billion cash portion with cash on hand and by taking on new debt, a move that will increase leverage on its balance sheet.
"Penumbra is a well-established company with an experienced, high-performing team and this acquisition offers Boston Scientific an opportunity to enter new, fast-growing segments within the vascular space," said Mike Mahoney, chairman and chief executive officer of Boston Scientific, in a joint statement released by the companies. Mahoney added that Penumbra's CEO, Adam Elsesser, is expected to join the BSX board of directors upon the deal's closing.
The strategic rationale centers on Penumbra’s established leadership in medical devices for vascular conditions, including its innovative portfolio for mechanical thrombectomy, a critical procedure for removing blood clots in stroke patients. The deal gives Boston Scientific a scaled entry into this high-growth market, positioning it more competitively against rivals like Medtronic and Stryker.
However, the near-term financial impact appears to be driving Tuesday's sell-off. Boston Scientific stated the transaction is expected to be $0.06 to $0.08 dilutive to adjusted earnings per share in the first full year after closing. The company projects the deal will become neutral to slightly accretive in the second year and more significantly so thereafter.
The acquisition values Penumbra at a premium of approximately 16% over its market capitalization before the announcement. For Penumbra, the deal represents a culmination of its innovation in complex vascular therapies.
"Our decades-long development of therapies for challenging medical conditions has focused on deep innovation for complex diseases so that we can offer physicians novel solutions to transform patient care," said Adam Elsesser, Penumbra's CEO. "I look forward to uniting our efforts and shared values as we come together with Boston Scientific."
The transaction is anticipated to be completed sometime in 2026, subject to customary closing conditions and regulatory approvals.