Boston Scientific tops J&J's bid for Guidant with $25bn offer
6 December 2005
In a move that seems to have taken the market by surprise, Boston
Scientific Corporation has offered to acquire all the outstanding shares of
Guidant Corporation for about $25 billion. The offer is a combination of
cash and stock worth $72 per Guidant share.
This offer is approximately $3 billion over the current value of the
Johnson & Johnson offer. Boston Scientific’s proposed price of $72 per share
represents a premium of approximately 16% over the closing price of
Guidant’s shares on December 2, 2005 — the last day of trading before the
Boston Scientific proposal was made public. Guidant shares closed at 61.82
on Friday 2 December and closed at 67.98 on Monday 5 December, the day the
new offer was made.
Guidant has issued a short statement saying that it has received the
offer. The offer comes nearly three weeks after the Johnson & Johnson offer
was approved by the Guidant board of directors. It also comes after two
senior executives of Guidant have left. Ronald Dollens retired as chief
executive in the middle of November and Guido J. Neels retired as chief
operating officer at the end of the month.
Assuming that Boston Scientific and Guidant enter into a definitive
agreement by the end of the year, it is anticipated that the proposed
transaction will close in the first quarter of 2006.
Boston Scientific's Chairman Pete Nicholas said: “The combination of
Guidant and Boston Scientific will create the world’s leading cardiovascular
device company accelerating diversification and growth. 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. Moreover, the financial benefits of this proposal are
compelling for Guidant shareholders, as our proposal provides superior value
over that provided by the transaction between Guidant and Johnson &
Johnson.”
“Our two companies share a proud common heritage as healthcare innovators
with a global reach and orientation,” added Nicholas. “We are excited about
the prospect of combining Guidant’s rapidly growing cardiac rhythm
management (CRM) business with Boston Scientific’s cardiovascular,
endosurgery and neuromodulation businesses. This transaction provides a
unique opportunity to advance our strategy to further diversify and to
expand the growth markets we serve. 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. It allows us to become a major provider
in the CRM industry. The transaction will significantly diversify our
revenue stream in multiple markets and enhance our overall competitive
positioning.”
“This combination is premised on growth, not cost cutting,” said Jim Tobin,
President and Chief Executive Officer of Boston Scientific. “We plan to
retain Guidant’s talented employee base, especially its dedicated sales and
product development teams. Both Boston Scientific and Guidant have long
traditions of technological innovation and excellence, and we are looking
forward to bringing these two great organizations together for the benefit
of our customers. We will continue to offer doctors and their patients the
most technologically advanced and highest quality medical devices and
therapies. Additionally, our combined resources and capabilities will allow
us to make further investments in our current businesses as well as pursue
new revenue opportunities. The combined company will have a strong balance
sheet and increased cash flow. Through this combination, Boston Scientific
becomes more diversified, participating in two of the largest medical device
markets — interventional cardiology and cardiac rhythm management. We
believe shareholders will also benefit from the upside potential resulting
from a valuation of Boston Scientific that is closer to our more diversified
peers.”
Links
The full text of the Boston Scientific press release and letter to Guidant
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