THE bidding war for Guidant, one of the world’s biggest manufacturers of pacemakers and defibrillators, took a new turn yesterday as Boston Scientific topped an existing offer from Johnson & Johnson by more than $2 billion.
Boston’s bid values Guidant at $80 a share, or just over $27 billion (£15.5 billion) — about 12 per cent more than J&J’s latest offer and about $6 billion more than the earlier price that J&J had agreed with Guidant’s board after a year fraught with manufacturing problems and the threat of legal action.
Analysts gave warning that Guidant’s valuation was fastapproaching “surreal” levels. The latest offer, comprising $42 in cash and $38 in Boston Scientific shares, includes a provision to pay compensation to Guidant’s shareholders if the deal fails to close by the end of March.
Last Friday Guidant’s board accepted a $71-a-share bid from J&J amid fears that any competing approach from Boston might struggle to clear competition hurdles.
Guidant’s board said last night that Boston Scientific’s new offer was superior to the existing Johnson & Johnson offer. However, the bid target cannot change its recommendation until January 25.
Advertisement
J&J originally launched a $76-a-share offer for Guidant in December 2004 in a deal that valued the business at $25.4 billion. However, the two sides agreed to drop the price to $63 a share last November after Guidant discovered a rare fault in some pacemakers.
Last month, Boston tabled a $72 cash-and-shares offer, but Guidant’s board accepted a lower proposal from J&J last Wednesday equivalent to $68. Boston increased its offer to $73 a share, prompting J&J to lift its own bid to $71 a share on Friday night.
Boston Scientific is partly funding the deal through a separate arrangement, by which Abbott Laboratories will buy Guidant’s catheter businesses for $4.1 billion. Abbott is also lending the company $900 million to help to finance the cash element of the offer.
Pete Nicholas, chairman of Boston Scientific, described the offer as compelling yesterday. “By any objective measure, our offer is clearly superior to that of Johnson & Johnson,” he said.
The company is keen to reduce its dependence on Taxus Express, a drug-coated wire mesh that helps to force open diseased arteries. Analysts have speculated that Boston might become a bid target if it fails to wrest Guidant away from J&J because prospects for Taxus on its own are distinctly unpromising.
Advertisement
Shares in Guidant rose more than 8 per cent to $76.22, their highest level for more than a year.