Guidant accepts J&J offer
BOSTON — Medical device maker Guidant Corp. on Friday night accepted an increased $24.2 billion buyout offer from Johnson & Johnson, turning aside a larger $24.9 billion bid from Boston Scientific Corp. in favor of a deal that Guidant said could be concluded more quickly.
The announcement of J&J’s bid and Guidant’s acceptance came about 24 hours after Boston Scientific increased its offer, and about three hours after passage of a deadline Boston Scientific had set for Guidant to respond.
The boards of both J&J and Guidant have unanimously approved the new J&J offer, which is to be voted on by Guidant shareholders Jan. 31, the companies said. Guidant’s board had previously accepted J&J’s earlier $23.2 billion offer presented Wednesday night, but Boston Scientific’s move to raise its proposal Thursday night prompted J&J to increase its bid a second time.
The move came after more than a year of dealmaking between Johnson & Johnson and Indianapolis-based Guidant. New Brunswick, N.J.-based J&J reduced its original $25.4 billion offer to $21.5 billion in November in response to recalls and regulatory investigations involving Guidant products. Unlike Boston Scientific’s proposal, J&J’s offer has already cleared an antitrust review, which would speed the process toward closing a deal.
“This agreement with Johnson & Johnson provides significant financial value and certainty for shareholders,” James Cornelius, Guidant’s chairman and CEO, said in a statement.
The announcement left Boston Scientific facing the prospect of perhaps increasing its offer one more time — possibly to a level that would leave it with an uncomfortable amount of debt. The company also could walk away, or press its case directly to Guidant’s shareholders in hopes of reshaping the company’s board to bring in members who embrace its bid.
J&J and Boston Scientific, rivals in the market for drug-coated heart stents, are dueling for Guidant’s business in implantable defibrillators and pacemakers, a fast-growing $10 billion business in which neither suitor is a player.
Natick, Mass.-based Boston Scientific had included enticements in its latest proposal for Guidant shareholders to guard against the possibility that a regulatory review could cause delays. Boston Scientific pledged to make interest payments to Guidant shareholders if the transaction doesn’t close by March 31, and also agreed to “divest all overlapping assets” if required.
J&J’s newest offer would pay $40.52 in cash and 0.493 shares of Johnson & Johnson stock for each outstanding Guidant share. J&J’s offer is worth about $71 per share, up from about $68 in its previous proposal.