Guidant leans towards Boston Scientific following improved offer
The board of directors of Guidant (Indianapolis, US) has adjudged Boston Scientific's (Massachusetts, US) revised takeover offer of $80 per share, or an aggregate of around $27bn, to be superior to the terms of its current merger agreement with Johnson & Johnson (J&J) (New Jersey, US).
The board of directors of Guidant (Indianapolis, US) has adjudged Boston Scientific's (Massachusetts, US) revised takeover offer of $80 per share, or an aggregate of around $27bn, to be superior to the terms of its current merger agreement with Johnson & Johnson (J&J) (New Jersey, US).
The $80 per share will be made up of $42 cash and $38 in Boston common stock.
Speaking about the latest offer, made on 17 January, Pete Nicholas, chairman of Boston Scientific, said: 'Our $80 per share offer for Guidant is compelling. We are providing Guidant shareholders with certainty of completion, significant upside potential and substantially more value today than the J&J transaction. By any objective measure, our offer is clearly superior to Johnson & Johnson's.'
J&J has responded with a company statement: 'J&J considers the proposal from Boston Scientific to be a highly dilutive and leveraged transaction based on extremely aggressive business projections and, as such, one that will not provide $80 per share in value to Guidant shareholders. The company will consider its alternatives under the existing merger agreement with Guidant.'
Guidant is currently party to a merger agreement with J&J which Guidant shareholders will vote on at a meeting on 31 January. This deal, which Guidant cannot alter its position on for five business days, until 25 January, offers to exchange each share of Guidant common stock for $40.52 cash plus 0.493 shares of J&J common stock, which equates to around $71 per share.
Furthermore, Boston has amended its agreement with Abbott Laboratories (Illinois, US) to divest Guidant's vascular intervention and endovascular businesses and share the rights to Guidant's drug-eluting stent programme, providing Boston closes its acquisition of Guidant.
Abbott will now pay $4.1bn to acquire Guidant's entire vascular business; $250m on US Food and Drug Administration (FDA) approval of Guidant's drug-eluting stent and $250m upon a similar approval in Japan. It would also purchase $1.4bn of Boston common stock (approximately 56 million shares - representing around 4% of the combined company) and provide Boston with a five-year, $900m interest-bearing loan.