Boston Scientific has agreed to undo part of its deal to acquire Advanced Bionics Corp., of Valencia, Calif., a maker of implantable electronic medical devices.
The agreement ends litigation between the company and the subsidiary, whose chief executive, Alfred E. Mann, Boston Scientific has unsuccessfully tried to fire. A judge ruled the company had acted in bad faith.
Yesterday's pact also reduces the potential payout Boston Scientific faced.
Under the terms of the new deal, Boston Scientific will retain Advanced Bionics's spinal-cord stimulators and its Bion microstimulator, currently in development.
The Natick company had already made a $740 million payment after acquiring privately held Advanced Bionics, with additional compensation to be determined by the company's future performance. In a regulatory filing yesterday, Boston Scientific said it faced potentially $2 billion more in payments.
But yesterday's pact provides a new schedule of payments to former Advanced Bionics shareholders, including $650 million payable upon the deal's closing and $500 million in March 2009. Boston Scientific plans to record an after-tax charge of $360 million for the transactions.
Advanced Bionics will return to being a separate entity and will keep its businesses in cochlear implants and its development program in drug pumps. Principal shareholders of Advanced Bionics would pay $150 million to buy back the two businesses.