Boston Scientific offers $25 billion to buy Guidant, topping Johnson & Johnson's offer

By E. Janene Geiss

Philadelphia, Dec. 5 - Boston Scientific Corp. offered Monday to buy Guidant Corp. in a cash and stock deal worth about $25 billion, which tops Johnson & Johnson's offer made last month by $3 billion.

The Boston Scientific offer values Guidant stock at $72 per share, about a 16% premium over the Dec. 2 closing price. Johnson & Johnson's offer valued shares at $63.43 a piece, according to a Boston Scientific news release.

Guidant issued a news release stating that its board of directors would consider the proposal, but declined further comment.

"The combination of Guidant and Boston Scientific will create the world's leading cardiovascular device company accelerating diversification and growth," said Pete Nicholas, chairman of Boston Scientific, in the release.

"The shareholders of both Guidant and Boston Scientific will benefit from the significant upside potential of the combined company, which will be strongly positioned in a wide range of medical markets and be supported by a more diversified base of revenues and earnings," he added.

He said the combination of Guidant's cardiac rhythm management business with Boston Scientific's cardiovascular, endosurgery and neuromodulation businesses offers exciting prospects.

"Combining the resources of two of the earliest pioneers in the field of interventional medicine promises a continuation of the prolific innovation that has enabled major advances in the treatment of so many diseases," Nicholas said.

Boston Scientific said it would retain Guidant's employees, especially sales and product-development teams.

The company has received commitment letters from Bank of America, NA and Merrill Lynch & Co. for the financing of the transaction, officials said.

About a year ago, Johnson & Johnson entered into an agreement to acquire Guidant for $25.4 billion, but Johnson & Johnson cut that offer to $21.5 billion after a series of Guidant product recalls. Guidant sued Johnson & Johnson in November in an effort to force the terms of the initial acquisition. Johnson & Johnson and Guidant settled on a revised offer Nov. 15 for $21.5 billion. That transaction was slated to close in the first quarter of 2006 pending Guidant shareholder approval.

Boston Scientific is a Natick, Mass., maker of medical devices, including heart devices.

Guidant, based in Indianapolis, develops therapies for cardiac and vascular disease.

New Brunswick, N.J.-based Johnson & Johnson is a manufacturer and marketer of health care products.

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