If Boston Scientific Corp. ends up merging with Guidant Corp., the
company will owe a huge debt to Abbott Laboratories, and not just a
debt of gratitude.
In its latest move to top Johnson & Johnson in the Guidant bidding war,
Boston Sci on Tuesday, Jan. 17, offered $80 per share, $9 higher
than J&J latest bid. A good portion of that increase comes courtesy of
Abbott Labs, a maker of healthcare products that range from medical
devices to testing kits to drugs to baby formula.
Instead of borrowing more money from banks and damaging its credit
rating as analysts feared, Boston Sci tapped Abbott, already a partner
in the takeover deal. To appease antitrust regulators, Boston Sci
promised to spin off Guidant's vascular products business, including a
drug-eluting stent in development, to Abbott.
But on Tuesday, Abbott agreed to pay more upfront, $4.1 billion, and bump its
loan to Boston Sci from $700 million to $900 million. What's more, it
will invest $1.4 billion in stock of the combined company if the deal
closes. That would give Abbott a 4% share of the new entity. (Abbott
would also pay $500 million in milestones if Guidant's stent, dubbed
Xience, ever came to market in the U.S. and Japan.)
In total, Abbott would pay Boston Sci $6.4 billion in cash at or around
the time the deal closed, according to the companies.
Guidant's board, which favors J&J's latest $71-per-share bid,
has until 5 p.m. Eastern Time Tuesday to say whether the new Boston offer is
superior. —Alex Lash
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