Johnson & Johnson raises bid to $23.2 billion to acquire Guidant, says both boards agree on deal

By E. Janene Geiss

Philadelphia, Jan. 11 - Johnson & Johnson said late Wednesday that it has reached a new agreement to acquire Guidant Corp. for $68.06 per share or $23.2 billion in fully diluted equity value.

The revised offer comes two days after Boston Scientific Corp. submitted its proposed a definitive agreement to acquire Guidant in a cash and stock deal worth $72 per Guidant share or $25 billion.

The Boston Scientific deal, announced Monday, also would include selling Guidant's vascular intervention and endovascular business to Abbott Laboratories for $3.8 billion and shared rights with Abbott on Guidant's drug-coated stent business.

But officials said Wednesday that the boards of directors of Johnson & Johnson and Guidant have unanimously approved revised Johnson & Johnson offer. And the Guidant board of directors recommended that its shareholders vote in its favor at the scheduled Jan. 31 shareholder meeting, according to a joint news release.

Under the new agreement, Johnson & Johnson said it will pay $37.25 in cash and 0.493 shares of Johnson & Johnson common stock for each outstanding share of Guidant common stock.

The transaction has a per share value of $68.06 to Guidant shareholders based on Jan. 11 closing prices, officials said.

Johnson & Johnson's initial offer, which was reiterated just Friday, was for $33.25 per Guidant share in cash and 0.493 shares of Johnson & Johnson common stock, a deal valued at $21.5 billion.

Boston Scientific's bid represented a 12% premium over Johnson & Johnson's initial offer. And while Boston Scientific's bid still is valued higher, some analysts speculated this week that shareholders may not want to split up the company by selling the vascular business unit to Abbott.

On Wednesday, Johnson & Johnson said it has secured all regulatory clearances and satisfied all other conditions to close the transaction.

The companies said they will promptly file updated materials with the Securities and Exchange Commission, including a supplement to the existing proxy statement/prospectus.

"This agreement with Johnson & Johnson provides significant financial value and certainty for shareholders," said James Cornelius, chairman and chief executive officer of Guidant, in the release.

"Together with Johnson & Johnson, we will have the resources to continue to build upon the existing Guidant businesses in our pursuit of meaningful innovations to address cardiovascular disease."

Johnson & Johnson said it plans to discuss the transaction further at its scheduled analyst meeting on January 24.

Abbott is an Abbott Park, Ill., health care company devoted to development, manufacture and marketing of pharmaceuticals and medical products, including nutritionals, devices and diagnostics.

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

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

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

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