No more fears

22 June 2005 By Robert Cyran Follow @rob_cyran

Guidant shares fell to a 10% discount to Johnson & Johnson s offer price after the medical devices group offered to replace heart implants. But the deal is likely to go ahead as planned. Replacements aren t typically expensive unlike the deal s $750m break fee.

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Shares in Guidant, a US medical devices manufacturer that has agreed to be acquired by Johnson & Johnson, closed at $69.42 on Tuesday. The terms of the $24bn cash and shares deal imply that J&J will pay $76 per share for Guidant. This means that Guidant shares are trading at a 9.5% discount to the offer price.

Last Friday, Guidant offered to replace 33,000 heart implants due to the danger that they can short circuit. There have been 43 reports of malfunctions in its devices, two of which resulted in death.

J&J said that it was still working towards closing its acquisition of Guidant in the third quarter of this year, but that Guidant's problems were serious.

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