Johnson & Johnson's bumpy $21.5 billion acquisition of Guidant Corp. hit another pothole last week when Boston Scientific Corp. upped the ante with a surprising $25 billion offer.
Boston Scientific's bid for Guidant and its substantial stake in the exploding electrophysiology market opened a new front in its battle with J&J. Until now, the two rivals have vied only over the plumbing side of cardiovascular care, each offering its own version of the game-changing drug-eluting stent.
Guidant officials said that in compliance with its agreement with J&J, its board of directors decided to provide information to Boston Scientific, but the board is not yet making any recommendations regarding the proposal.
Boston Scientific took that as a signal that Guidant's board "has determined that our proposal is reasonably likely to lead to a superior proposal." The company said it could launch into due diligence immediately, sign a definitive agreement by month's end and close the deal in the first quarter of 2006.
Meanwhile, J&J proceeded with its revised agreement with Guidant and indicated it was sticking to its bid, saying that the company continued to believe that the deal "represents full and fair value based on extensive evaluation and due diligence and is in the best strategic interest of Guidant, its customers and patients."
J&J last month knocked off $4 billion from its original $25.5 billion offer. The deal, first announced in December 2004, nearly derailed because of J&J's concerns about recent recalls of Guidant products and related investigations of Guidant implantable electrophysiology devices. The Federal Trade Commission approved the proposal in November on the condition that J&J divest some of its related businesses. The newly revised deal was expected to close in the first quarter of 2006.
Boston Scientific's interest was welcome news for providers. "It tells us that Guidant still is a robust company in the defibrillator market," said Anne Curtis, president of the Heart Rhythm Society and chief of the division of cardiology at the University of South Florida. "It means Guidant will still be around, and we will continue to have three major companies in the U.S. that are manufacturing and getting these products out."