Avista to buy Boston Scientific units for $425m

DLJ spinout Avista Capital Partners has made its fifth investment in the healthcare industry, with its agreement to buy the fluid management and venous access businesses of Boston Scientific.

DLJ spinout Avista Capital Partners will acquire Boston Scientific Corporation’s fluid management and venous access businesses for $425 million (€295 million) in cash.

Ron Sparks

The two units will operate as a combined company after the close of the transaction, expected in the first quarter of 2008. Avista healthcare industry advisor Ron Sparks will be chairman and chief executive of the company, and Dave McClellan, currently president of Boston Scientific’s oncology business, will be president.

The fluid management business produces products for managing fluid and pressure during angiography and angioplasty procedures. The venous access business manufactures devices that provide access to the blood stream for patients who require intravenous antibiotics, nutrition, chemotherapy and blood sampling. Projected revenues for the two businesses in 2007 are $170 million.

The business benefits not only from good management, Sparks said, but also brand name recognition, a good track record, a stable base of business and significant growth on the oncology side. Sparks and Avista will seek to make further add-on acquisitions for the company, as well as develop new products.

The sale of the two units is part of Boston Scientific’s plan to divest its “non-strategic assets”. The medical device conglomerate also sold off its cardiac surgery, vascular surgery and auditory businesses.

The Boston scientific units are Avista’s fifth investment in the healthcare industry. This year the firm made a $210 million investment in safety testing company BioReliance, and also participated in the $3.5 billion, Madison Dearborn Partners-led buyout of lab equipment supplier VWR International.

In 2006, the firm invested €125 million in Denmark-based pharmaceutical company Nycomed and $50 million in medical waste removal company MedServe.

DLJ head Thomson Dean, along with other senior executives from the private equity arm of Credit Suisse First Boston, founded Avista in 2005, approximately six months after CSFB announced restructuring plans for its private equity division.

The firm closed its debut fund on $2 billion this July, with commitments from some 60 public and corporate pensions, financial institutions, endowments, foundations, family offices and individuals. Avista’s seven general partners committed $161 million to the fund.