Few people in the M&A world need to be reminded that acquisitions often go wrong. But it's still useful to reflect on the ways that can happen. And the retirement of Jim Tobin as CEO of medical devices maker Boston Scientific Corp. (NYSE:BSX), announced Thursday, is a good occasion to do so. Tobin will be succeeded by former Zimmer Holdings Inc. head Ray Elliott.
Though he's had a long career and has been CEO for nearly 10 years, Tobin (pictured) is bound to be remembered in the deal world as one of the greatest-ever examples of the winner's curse. After winning a noisy bidding war with Johnson & Johnson (NYSE:JNJ), he led the acquisition of Guidant Corp. for $27 billion in cash and stock, leaving his company burdened by debt and vulnerable when Guidant was hit by recalls of its defibrillators.
Mass Device, a trade pub that has a
thorough retrospective up, points out that an earlier deal -- the 2004 acquisition of Advanced Bionics for $740 million -- also proved rocky.
So will Boston Sci, now on the mend, swear off deals under Elliott, whom Tobin, nearly 65, calls an "outstanding choice"? The other side of risk being reward, the answer is: of course not. Elliott calls the current devices market "a target-rich environment." -
Kenneth Klee
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