Stryker Corp. said Thursday it will pay up to $1.5 billion to buy the neurovascular division of fellow medical device maker Boston Scientific.
Boston Scientific shares jumped in pre-market trading on the news.
Stryker plans to pay $1.4 billion at the deal's closing and then up to $100 million in milestone payments. The deal is expected to close in the fourth quarter.
Boston Scientific, based in Natick, Mass., will receive the milestone payments for the commercialization of the next-generation Target detachable coils, which are used to treat hemorrhagic strokes, and for the transfer of some manufacturing facilities.
Its neurovascular division is based in Fremont, Calif., employs about 1,150 people and had $348 million in sales last year. It makes detachable coils, stents and other devices used to treat brain aneurysms and other types of cerebrovascular disease.
Stents are mesh-metal tubes that hold arteries open after blood vessels are surgically cleared of plaque. Coils are used to fill and seal aneurysms.
Boston Scientific Neurovascular President Mark Paul will head the Stryker Neurovascular business.
Stryker, based in Kalamazoo, Mich., said the deal is expected to be neutral or add slightly to its earnings per share next year, excluding certain charges.
Boston Scientific said it expects after-tax proceeds of about $1.2 billion, counting the milestone payments. It will use about half that for acquisitions and the remainder to retire debt.
Boston Scientific shares climbed 23 cents, or 4 percent, to $6.54 in pre-market trading. Stryker shares were down 3 percent, or $1.63, to $49.27.