Boston Scientific Counts J&J’s Guidant Bid

Johnson & Johnson got some unwelcome competition in its attempted takeover of Guidant when Boston Scientific made a bid today valued at $25 billion, about what J&J had originally bid for Guidant. This bid would put Boston Scientific in the $10 billion market for implantable pacemakers and heart defibrillators. Most of all though, it will be embarrassing for J&J to compete.

J&J’s original bid was for $25.4 billion, but then Guidant’s Contak Renewal III and IV implantable heart devices were recalled. This made J&J re-think its bid, and the management there decided that the value of Guidant didn’t justify $25.4 billion bid since some of the products were iffy. Last month, the two parties agreed on a $19 billion price tag. Guidant even said, though Chairman Jim Cornelius, that the lower price “appropriately reflects the business challenges we have experienced.”

Boston Scientific’s bid essentially argues that J&J had it right the first time. To enter a bidding war after dropping the price would be an admission by J&J that is really has no idea what it is doing. To offer more than $25 billion to top Boston Scientific is virtually impossible because J&J has said that is too much.

Boston Scientific thinks it can close this deal before the first quarter of next of 2006 ends. They have commitment letters from both Merrill Lynch and Bank of America to finance the deal, and it shouldn’t be all that hard to convince Guidant’s shareholders to accept more money than they had been offered.

Johnson & Johnson has made no comment as this edition is being posted to the web. There isn’t very much they can say. Boston Scientific looks to have found them counting chickens that hadn’t hatched yet. Quite a coup de bourse.

© Copyright 2005 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.
Produced using Fedora Linux.


Home