Updated from 4:33 p.m. EST
has accepted a new, higher offer from
Johnson & Johnson
and agreed to be acquired by the New Jersey health-products giant for $71 a share, or $24.2 billion.
Under the new pact, J&J will pay $40.52 in cash and 0.493 shares for each share of Guidant. The Indianapolis-based company accepted the bid, even though it's lower than the latest proposal of $73 a share from
Guidant, the medical device maker whose regulatory woes
left it friendless as recently as November, has become the subject of a fierce bidding war. Boston Scientific upped its takeover offer for the company Thursday to $26 billion, or $73 a share. J&J's latest terms mark its fourth different price for Guidant.
"This agreement with Johnson & Johnson provides significant financial value and certainty for shareholders," James Cornelius, chairman and chief executive of Guidant, said in a statement on the latest offer. "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."
Boston had said Guidant had until 4 p.m. EST to declare its new offer preferable to J&J's last bid of $23.2 billion, or about $68 a share, made Wednesday. Boston also said if it didn't, the offer would "expire."
That deadline, though, came and went without a word. Boston Scientific's most recent proposal retains a 50-50 stock and cash ratio of its last bid, which came Sunday. Boston had added a vow to divest all overlapping assets that a combination of Guidant would cause, and also said it would pay interest to Guidant shareholders if the deal doesn't close by March 31.
Shares of Guidant rose 44 cents to close at $70.84. J&J closed off 39 cents to $61.82, and Boston Scientific, of Natick, Mass., gained 15 cents to $25.20.
Boston's blanket divestiture promise enhances a previous agreement under which
said it would buy Guidant's coronary stent business in the event of a consummated merger with Boston Scientific. Boston Scientific previously said it would share rights to Guidant's drug-eluting stent portfolio with Abbott. The divestitures are aimed at winning antitrust clearance for the deal.
Two months ago, a higher offer from J&J was hard to fathom, considering that in November the company appeared close to calling the whole thing off. Guidant and J&J originally signed a merger deal worth $76 a share in December 2004, but the pact nearly fell apart after Guidant endured a series of heart-device recalls last year. The sides agreed in mid-November on a revised takeover price of a little more than $63 a share.
Then, in early December, Boston Scientific entered the picture, saying it would trump that price by nearly $9 and pay $72 a share for Guidant. J&J kept its poker face for several weeks, until Wednesday, when it said it could live with paying what amounted to a bit less than the midpoint of its previous two offers.
Guidant's board was already publicly supporting J&J, and it did so again after the company came out with the roughly $68-a-share offer.
"Guidant is doing a masterful job of pitting one against the other," Jefferies & Co. analyst Ryan Rauch said Thursday. "But ultimately, if J&J wants Guidant, it can get Guidant."
John Putnam, an analyst at Stanford Financial, said this week that he believes Boston Scientific should walk away from the fight, considering it might have to wait three years before the Guidant takeover starts boosting its bottom line.
"They could visit
if they want to be in
implanted cardiac defibrillators." St. Jude's name has come up from time to time in takeover speculation among analysts.
Rauch said previously that it comes down to a question of which stock Guidant shareholders want to own. Rauch himself prefers Boston Scientific's stock.
"They have a better pipeline, they have faster top-line growth, and they're cheaper," he says.