Boston Scientific to divest minority interest in Endosurgery Group

Boston Scientific's Board of Directors has authorised management to explore an initial public offering (IPO) of a minority interest in its Endosurgery group. An IPO would involve Boston Scientific selling approximately 20% of the Endosurgery group and establishing a separately traded public company. The new company would remain a majority-owned subsidiary of Boston Scientific.

The Endosurgery group consists of businesses focused on less-invasive medical devices in key markets: endoscopy, urology, gynaecology and oncology. The Endosurgery group has delivered consistent revenue and earnings growth over the past eight years with a compound annual growth rate in revenues of approximately 12% during that period. In 2007, the Endosurgery group is expected to generate more than US$1.4 billion in revenue.

Following the acquisition of Guidant in 2006 and the company's increased presence in the cardiovascular market, the Endosurgery businesses have been less visible to the investment community. The company intends to explore the benefits that may be gained from operating the Endosurgery group as a separately traded public company. The benefits may include:

unlocking the value of the global Endosurgery businesses for shareholders while maintaining its position as a leading diversified medical device company;

improved visibility into Endosurgery growth and performance relative to comparable markets;

increased management and employee focus within Endosurgery as a result of the group's status as a separately traded public company;

improved ability to attract and retain key talent to the Endosurgery businesses through equity incentives more directly aligned with the group's performance; and

generation of more than US$1 billion of tax-efficient funding to accelerate debt repayment.

If an IPO were to take place, the Endosurgery group would continue to be fully consolidated with Boston Scientific for financial reporting purposes. The company hopes to complete its exploration of a potential IPO over the next six to 12 months. If a decision is made to move forward, the IPO would likely occur in late 2007 or early 2008.

"The Endosurgery group has a remarkably consistent record of growth and profitability, having achieved leading market shares for most of its key product lines," said Jim Tobin, Boston Scientific president and CEO. "The potential IPO of a minority interest in our Endosurgery group would highlight its success and stability and create a direct investment vehicle in these specialty device markets, while giving us greater financial flexibility. This action would help to achieve our goals of maximising shareholder value by unlocking the group's potential, while maintaining our position as a leading diversified medical device company."