Boston Scientific and Guidant Announce Merger

Following a dizzying round of bids from two companies since early December, Guidant Corp. (Indianapolis, IN, USA) has announced that its board has approved and entered into a merger agreement with Boston Scientific (Natick, MA, USA), which will acquire Guidant for cash and stock worth U.S.$80 per share, or about $27 billion.

Only days earlier, Guidant announced a deal with Johnson & Johnson (J&J, New Brunswick, NJ, USA; www.jnj.com), which offered Guidant $71 per share, or about $24.2 billion. However, Boston Scientific has continued to increase its own offer for Guidant, which reached $73 per share in mid-January. After Boston Scientific heard about the Guidant/J&J deal, the company increased its offer to $80 per share.

Guidant and Boston Scientific believe their combined company should be attractive to shareholders. It will have leading positions in growth markets, notably cardiovascular devices, and have total revenues in 2006 of nearly $9 billion. "Guidant and Boston Scientific share an entrepreneurial spirit, highly talented employees, strong customer relationships, and an ability to pioneer lifesaving therapies for patients around the world,” observed Pete Nicholas, chairman of Boston Scientific.

When J&J began its courtship of Guidant, the company hoped to gain a foothold in the heart-defibrillator business, which is growing about 20% per year. J&J's initial offer of $24.5 billion was made in December 2004, but following malfunction problems at Guidant, it reduced its offer to $21.5 billion. Then Boston Scientific came into the game.

Boston Scientific has also entered into an agreement with Abbott Laboratories (Abbott Park, IL, USA), under which Boston will divest the vascular intervention and endovascular businesses of Guidant, while agreeing to share rights to Guidant's drug-eluting stent program. Boston will receive $4.1 billion from Abbott for the Guidant assets, a loan of $900 million, and Abbott's agreement to acquire $1.4 billion of Boston's common stock. This move is designed to help secure antitrust approvals for the Boston/Guidant transaction.






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