IM this article to a friend!

June 2, 2004

Cochlear surges after rival's takeover

From: The Age, Australia - Jun 2, 2004

Shares of bionic ear maker Cochlear surged more than six per cent after a key United States competitor was bought overnight for a comparatively high price.

The stock rose $1.26 or 6.31 per cent to $21.24 by 1352 AEST, edging towards its highest close in two months.

Overnight, medical device maker Advanced Bionics Corp was bought by Massachusetts-based Boston Scientific Corp for $US740 million ($A1.05 billion), roughly the same as Cochlear's market capitalisation at Tuesday's close.

But Cochlear has about two-thirds of the hearing implant market and Advanced Bionics has markedly less, prompting traders to speculate Cochlear had been undervalued.

"For a smaller company than Cochlear, (Boston Scientific Corp) have paid about the same as Cochlear's current market cap," Tolhurst Noall senior private client adviser Marcus Padley said.

Mr Padley said the acquisition's impact on Cochlear was uncertain, since Boston Scientific Corp gave Advanced Bionics access to significant amounts of capital but was not expected to focus on growing its hearing implant business. AdvertisementAdvertisement

"No doubt the analysts will be popping out with their new sum-of-the-parts valuations for Cochlear in research tomorrow, using the (Boston Scientific Corp) price as a benchmark. They'll all be well in excess of the current share price," he said.

© 2004 AAP