-- Johnson & Johnson said Tuesday that it agreed to acquire Guidant Corp. for $21.5 billion in cash and stock under a revised deal that values the troubled maker of implantable heart-care devices at about $4 billion less than last year's original pact.
Under the revised agreement that likely ends a legal showdown between the two companies, health care-products maker Johnson & Johnson would buy Indianapolis-based Guidant for about $63.08 per share, down from December's original offer of $25.4 billion, or about $76 a share.
"It appropriately reflects the business challenges we have experienced in this period," said James M. Cornelius, Guidant's chairman and interim chief executive. "We remain confident about Guidant's ability to rebuild . . . market share."
Guidant shares jumped $4.75, or 8 percent, to close at $62.50 on the New York Stock Exchange, while Johnson & Johnson shares rose $2.32, or 4 percent, to end at $62.83.
The deal, originally expected to close in the third quarter, was delayed by Guidant's continued problems over the summer with the recall of thousands of pacemaker and implantable defibrillators, causing many to fear that the transaction would not close. When Johnson & Johnson showed signs of wanting to back away from the original deal, Guidant last week sued the company to complete it.
Johnson & Johnson, based in New Brunswick, N.J., said it was not bound by the original terms, however, because product recalls and related regulatory investigations, claims and other developments have had "a material adverse effect" on Guidant.
Despite Guidant's recalls and regulatory investigation, company executives said the acquisition would help Johnson & Johnson diversify as it begins to face increased competition for its pharmaceutical products. The combined companies would keep the Guidant name for cardiovascular products manufactured by the two.
Guidant shareholders must approve the revised deal, which is expected to close in January.