Guiding light

12 Jan 2006 By Robert Cyran Follow @rob_cyran

J&J’s bid isn’t just lower than Boston Scientific’s $25bn rival offer. It hasn’t even increased it to the level that it originally offered. What’s more, the J&J offer is below Guidant’s share price. Guidant’s recommendation is puzzling.

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Boston Scientific has revised its bid for Guidant upwards to $25.5bn and given Guidant's board one day to respond to the new offer. The medical device company's board has already accepted a bid of $23bn from Johnson & Johnson despite the fact that Boston bid $25bn. Guidant shareholders will be able to vote on the matter on January 31.

If Guidant's board does not accept Boston Scientific's revised offer by January 13, Boston will revert to its initial bid of $25bn.

The J&J bid offers $37.25 in cash and 0.493 shares for each Guidant share. The value of the offer at the close of markets on Thursday was $67.92 per share. Boston's new bid is $36.50 in cash and $36.50 in paper, or $73 per share. In addition, if the bid does not close by March 31, Boston will raise it by the equivalent of 6% annually at a pro rata rate.

Guidant's shares closed at $70.40 on Tuesday.

J&J originally offered $76 per share last year, but lowered the bid after Guidant was hit by a wave of product recalls. Guidant recently received a warning letter from US regulators that it has until January 13 to fix manufacturing deficiencies.

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