The Deal
Sunday, November 8, 
3:42 pm

Your Move, Johnny John

  Share     E-Mail    Discussion    Print Story

All M&A eyes are on healthcare giant Johnson & Johnson, which has until Sunday, Jan. 22, to make a counteroffer for Guidant Corp., which on Jan. 17 accepted an $80-per-share bid from Boston Scientific Corp.

Whoever wins by overpaying — Boston Sci's whopper if accepted will be dilutive to earnings until at least 2010 — the real winner may turn out to be Abbott Laboratories. Abbott is kicking in more than $6 billion to help Boston chase its white whale. If Boston Sci wins, it will spin off a variety of Guidant's medical devices, including stents, to Abbott. If J&J wins, Abbott still gets the stents.

Boston Sci and J&J are rivals in the drug-eluting coronary stent business — little metal-mesh cylinders that prop open arteries that heart disease has damaged. But the stent market, a hot growth area a couple of years ago, is slowing dramatically, and Boston Sci needs new business drivers. J&J is much more diversified, and with 9 times the market value of Boston Sci, can afford to throw more cash around. (Some analysts are already calling Boston's latest bid crazy.)

Both want Guidant for its lucrative heart implant products. But deaths of several Guidant patients have spurred recalls and legal action. That hasn't deterred either suitor in the bidding war, although it was those ongoing problems, and J&J's insistence on a price reduction in November, that opened the window for Boston's rival bid.— Alex Lash

Go to story from The Deal
Go to story from Business Week

Continue reading below

Also on Dealscape





Post a comment





The Deal Pipeline

Deal Video


Inside The Deal: Linklaters' Schmidt says how regulators handled Pfizer Inc.'s acquisition of Wyeth is an outlier of how others merger reviews will be conducted.


More video...

Crisis On Wall Street
Technology
Deals of The Decade

Community

Industry Insight

Dealing with frozen bank lending

If your bank is not willing to lend, what can you do as your company continues to seek growth?


Judgment Call

The coming age of the renminbi

The Chinese currency will play an increasingly important role in international commerce and finance.


Industry Insight

Banking on PE investments

Howls of protest greeted the FDIC policy statement, but the financial services industry should get over it.


footspacer.jpg footspacer.jpg footspacer.jpg footspacer.jpg footspacer.jpg


©Copyright 2009, The Deal, LLC. All rights reserved. Please send all technical questions, comments or concerns to the Webmaster.