Boston Scientific Offers $25B for Guidant
Tuesday, December 6, 2005; 12:17 AM
INDIANAPOLIS -- Boston Scientific Corp.'s president says his company's proposal to buy Guidant Corp. is a better fit for the medical device makers than Johnson & Johnson's offer.
"Our proposal is better for Guidant, its shareholders and its employees than Johnson & Johnson's revised offer and can be closed quickly," said Jeff Tobin, who is also Boston Scientific's chief executive officer.
Boston Scientific on Monday offered $25 billion to buy Guidant, topping Johnson & Johnson's watered-down bid by more than $3 billion.
Market analysts said that J&J may not want Guidant badly enough to spend billions more for the Indianapolis-based maker of pacemakers, defibrillators and other devices which has been plagued by a series of recalls and by related regulatory investigations.
Guidant's strengths outweigh its problems for Boston Scientific, which has seen its profit dwindle recently, Jefferies & Co. analyst Ryan Rauch said.
"Guidant would shore up Boston Scientific's 2008 pipeline, if they're willing to take significant dilution to their shares in the short-term," Rauch said.
Rauch said he did not expect Guidant's shareholders would embrace J&J's offer over Boston Scientific's, given the premium and the frayed relations between Guidant and J&J. Rauch said J&J was not likely to sweeten its offer.
"There's no love lost between Guidant and J&J," Rauch said. "I believe J&J will not come back into the dance at a higher price."
Guidant's once flagging stock rose $6.16, or nearly 10 percent, to close at $67.98 Monday amid Wall Street's speculation of a bidding war.
Boston Scientific, whose products include the top-selling cardiac stent Taxus, offered Guidant a combination of cash and stock worth about $72 per Guidant share _ a 16 percent premium over Friday's close. The prospect of entering the lucrative $10 billion international market for implantable pacemakers and defibrillators outweighed Guidant's recent legal and regulatory woes.
Just three weeks ago Guidant accepted a revised $21.5 billion proposal from J&J and stopped suing the health care products company to close on a year-old acquisition offer of $25.4 billion.
Guidant's original deal with J&J bogged down amid a series of recalls and warnings affecting nearly 200,000 pacemakers and about 88,000 defibrillators since June. Dozens of shareholder and product liability lawsuits have ensued, costing Guidant more than a quarter of its value. Its stock plummeted to a low of $55.26 last month.