One of the medical technology sector’s most dynamic players is maneuvering to gain a bigger market share. This morning, Boston Scientific (NYSE:BSX) announced that it is acquiring Apollo Endosurgery (NASDAQ:APEN). The smaller company specializes in devices that make endoluminal surgery (ELS) procedures possible. While APEN stock hasn’t done much throughout the current month, it has been rising gradually over the past six months despite a raging bear market.
Since news of the acquisition broke this morning, shares of Apollo Endosurgery have been climbing and show no signs of slowing down. As of this writing, APEN stock is up 65% for the day, having also led the charge in pre-market trading.
Let’s take a look at this new deal and what investors can expect from both Apollo and Boston Scientific.
What’s Happening With APEN Stock?
Like APEN stock, BSX stock is also rising this morning. While it hasn’t gained by anywhere near as much, investors should be focused on the bigger picture here. This deal has the potential to set these names up for long-term success.
Boston Scientific is a play in the medical engineering and artificial intelligence (AI) space. Now, it is primed to cover a fast-growing section of the market through the new venture. Apollo Endosurgery has a diverse project pipeline. Its devices provide a “less-invasive alternative to open and laparoscopic surgery” for patients suffering from gastrointestinal tract diseases or morbid obesity. In a statement released by the company, Boston Scientific’s Senior Vice President and President of Endoscopy Mike Jones addressed this topic:
“Endoluminal surgery is an emerging field and a core focus for our Endoscopy business […] We intend to expand our global capabilities in ELS with the differentiated innovation that Apollo Endosurgery offers, and we will continue to focus on procedural adoption as well as professional education in this exciting space. This acquisition also enables us to enter a new adjacency – the endobariatric market – and deliver strong, continued growth across our business.”
The acquisition press release also notes that Apollo is expected to report $76 million in net sales for 2022. This growth is primarily due to progress from its endoscopic suturing system franchise. In July 2022, the U.S. Food and Drug Administration (FDA) granted Apollo “de novo clearance” for several of its devices, ensuring them a pathway to market. This marked the first time devices created for endoscopic sleeve gastroplasty (ESG) and endoscopic bariatric revision procedures had received FDA authorization. APEN stock began trending upward as a result.
Boston Scientific expects the Apollo acquisition deal to close in the first half of 2023. This is subject to the standard closing conditions of an acquisition. An additional statement further clarifies the details:
“The acquisition price of $10.00 per share represents an approximate 67% premium to the closing price of Apollo’s common stock on November 28, 2022 and the volume weighted average closing price of Apollo’s common stock in the three months prior to announcement of the transaction.”
The Bottom Line
Since the official closing of the deal is still a few months away, APEN stock has plenty of time to rise. What’s more, given the growth potential that this deal represents for both companies, it’s likely that it will. Investors should watch both stocks carefully as the companies prepare to take the medical technology industry by storm.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
