This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Guidant Has New Deal

Updated from 9:43 a.m. EST

Johnson & Johnson (JNJ) and Guidant (GDT) are back at the altar.

After saying it wanted out of its $25.4 billion takeover bid following a series of regulatory setbacks, J&J agreed Tuesday to acquire the medical device maker for about $21.5 billion, or $19 billion net of Guidant's cash. The new bid will pay Guidant shareholders $63.08 in cash and stock, down 17% from the old offer of $76 a share.

"The board believes that it is in the best interest of shareholders to proceed with the merger agreement at the revised terms," Guidant said. "Our enthusiasm for this merger and its potential continues. This agreement makes sense for Guidant shareholders and its employees."

Guidant, whose stock plunged from the low $70s after the first agreement fell apart, rose 8.2% to $62.50. J&J gained 3.8% to $62.83 as the market rendered a positive verdict on the value being transferred under the new price.

The new deal, which comes out to $33.25 in cash and 0.493 of a J&J share, was approved by both companies' boards. Guidant shareholders must still approve it before its expected close in the first quarter of 2006.

Tuesday's news should end the year's most contentious merger saga, one that has repeatedly confounded shareholders on both sides, led to a last-ditch lawsuit and infuriated a vocal community of merger arbitrage hedge funds.

"We are delighted that our companies have reached an accord," J&J said. "Our agreement demonstrates that we remain committed to the goal of together building an extraordinary cardiovascular business that can deliver better medical options sooner to millions of patients."

Assuming the deal closes on Jan. 1, J&J CEO Robert Darretta expects the company's 2006 earnings to be cut by 8 cents to 11 cents, excluding noncash charges. He says the deal should be modestly dilutive to 2007 earnings but add strongly to profits thereafter.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs