The battle for control of United States-based medical products maker Guidant hotted up on Monday with Boston Scientific saying it had offered $25-billion, topping an offer from Johnson & Johnson.
Boston Scientific — itself a target of takeover speculation — said it was offering $72 a share, a premium of about 14% over the $63,43 offered under a revised deal between Guidant and Johnson & Johnson.
Shares in Guidant leapt 13% but there was no immediate comment from the company, which agreed last month to a 15% cut in the Johnson & Johnson offer price amid safety concerns over Guidant’s heart products.
Jim Cornelius, the Guidant chairperson, said at the time the lower price ”appropriately reflects the business challenges we have experienced” — but Boston Scientific has seen it as an opportunity.
Boston Scientific is a smaller rival of Johnson & Johnson in the growing market for devices to open clogged heart arteries. If a deal were signed, it would also allow Boston Scientific to enter the $10-billion market for heart pacemakers.
”This is a phenomenal move. They’re literally telling J&J to put up or shut up,” said Mark Landy, an analyst at Susquehanna Financial Group, who described it as a ”welcome holiday gift for Guidant”.
Boston Scientific said the proposed deal would significantly diversify its revenue stream in multiple markets and put it in a stronger position to compete.
”Through this combination, Boston Scientific becomes more diversified, participating in two of the largest medical device markets — interventional cardiology and cardiac rhythm management,” said Jim Tobin, president and chief executive of Boston Scientific.
”To sum up, our proposal is better for Guidant, its shareholders and its employees than Johnson & Johnson’s revised offer, and can be closed quickly,” Tobin said.
Boston Scientific said it believed the deal could be closed in the first quarter of 2006, assuming it reached an agreement by the end of this month. The company said it has factored into the transaction a $625-million break-up fee.
The move comes on the back of speculation last Friday that Abbott Laboratories would make its own move to buy Boston Scientific amid unusually brisk Boston Scientific options activity.
Guidant shares rose $8,18 to $70 on the Inet electronic brokerage system from a Friday close of $61,82 on the New York Stock Exchange.
Boston Scientific shares fell 8%, or $2,18 to $25,15 while Johnson & Johnson’s stock was little changed.
Not all analysts welcomed the move. Les Funtleyder, at Miller Tabak, said in a research note that while Guidant and Boston Scientific fit together fairly well strategically, a union between the two would take a while to integrate and potentially weaken the franchise of both companies.
”We still believe J&J is a better home for Guidant than Boston Scientific,” he said. – Guardian Unlimited Â