Johnson & Johnson's chief financial officer said yesterday the company is considering alternatives to its planned acquisition of troubled heart devicemaker Guidant Corp. The acquisition, originally set to close in September, has been in question because of Guidant's repeated recalls of pacemakers and defibrillators.
The comments by J&J CFO Robert Daretta were the first public indication the $25.4 billion deal may be in trouble, rather than just delayed.
"As it relates to the previously announced product recalls at Guidant and the related regulatory investigations and other developments, we believe that these are serious matters," Daretta told analysts during a conference call. "In light of these matters and their impact, we are continuing to consider the alternatives under our merger agreement."
Since June, Guidant has recalled or issued warnings about 88,000 heart defibrillators and almost 200,000 pacemakers because of reported malfunctions. The company is under fire for waiting years to alert doctors and patients about possible flaws in some products.
Guidant said today it still believes its acquisition by Johnson & Johnson makes strategic sense. "While neither company depends on this transaction for its continued future success, Guidant believes that the strategic rationale for combining the two companies is as strong today as when we entered into the merger agreement," CEO Ronald Dollens said in a statement.