Indianapolis - Boston Scientific was acquiring Guidant for about $27.2 billion (R164 billion) in cash and stock, it said yesterday, ending an almost two-month bidding war against rival Johnson & Johnson (J&J) for the heart device maker.
Boston Scientific and J&J have been competing to buy Guidant since early December, hoping for a stake in the fast-growing $10.3 billion cardiac rhythm management market. The battle raged despite months of recalls and safety warnings by Guidant about defects in its pacemakers and defibrillators.
Last week, Guidant's board said Boston Scientific's $80 a share offer was favourable to a lower, $71 a share offer from J&J. A five-day period for J&J to sweeten its $24.2 billion bid expired at midnight on Tuesday.
J&J said topping its offer would not have been in the best interests of its shareholders. Its shares rose 0.9 percent early in New York yesterday.
The acquisition of Guidant must be approved by federal regulators and the shareholders of each company. Boston Scientific officials said they expected the deal to be closed in the first quarter.
Jim Tobin, Boston Scientific's president and chief executive, said: "We look forward to ... creating a global leader in cardiovascular devices." The combined companies could have 2006 revenue of nearly $9 billion.
Jan Wald, an analyst with AG Edwards & Sons, said: "I think it's good for Guidant shareholders. I think, even though it's dilutive, and perhaps dilutive for a long time, it's a good strategic move on Boston Scientific's part."
In filings with the Securities and Exchange Commission this month, Boston Scientific said Guidant's pacemakers and defibrillators could account for nearly one-quarter of pro forma sales.
The heart device market is expected to grow by nearly 25 percent by 2008. That growth is likely to offset any of Guidant's legal liability, estimated to be as high as $2 billion, that Boston Scientific may have to absorb.
- Sapa-AP