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Strategies & Market Trends : Speculating in Takeover Targets -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (987)	1/13/2006 12:48:13 AM
From: richardred	Read Replies (1) \| Respond to of 7243

Boston Scientific Increases Guidant Bid Thursday January 12, 10:38 pm ET Boston Scientific Hikes Ante in Bidding War With J&J for Medical Device Maker Guidant Corp. BOSTON (AP) -- Boston Scientific Corp. further raised the stakes Thursday in a bidding war to buy rival medical device maker Guidant Corp., boosting its offer by about $330 million in hopes of ousting rival suitor Johnson & Johnson. Boston Scientific's sweeter, $73-per share cash-and-stock bid -- larger than the value of J&J's overall offer, but with a smaller cash component -- came 24 hours after J&J raised its bid for Guidant from $21.5 billion to $23.2 billion. With its new offer of roughly $25 billion, Boston Scientific hopes to turn Guidant's board away from J&J's offer and in favor of its proposal quickly. Boston Scientific said Thursday night it notified Guidant that its latest offer would expire at 4 p.m. EST Friday unless Guidant's board declared Boston Scientific's offer superior by then. With such a declaration, Boston Scientific's offer will remain open until Jan. 24. "Our amended offer addresses all of the outstanding issues raised by Guidant's board," Boston Scientific chairman Pete Nicholas said in a statement. In response, Guidant said in a brief statement that its board "will evaluate all aspects of the offer." J&J spokesman Jeffrey Leebaw declined to comment. New Brunswick, N.J.-based J&J and Indianapolis-based Guidant said in a joint statement Wednesday that Guidant's board of directors recommended shareholders vote in favor of J&J's offer in a Jan. 31 shareholder meeting. With its latest offer, Boston Scientific values Guidant at $73 per share -- $2.60 above its closing price Thursday -- and proposes to pay Guidant shareholders half in cash and half with its own shares. J&J's offer would pay $37.25 in cash -- 75 cents per share more than Boston Scientific -- and 0.493 shares of Johnson & Johnson stock for each outstanding Guidant share. J&J's offer is worth $67.92 per share. In announcing the formal version of its initial Dec. 5 bid on Sunday, Boston Scientific had said that offer totaled "$25 billion in the aggregate" based on that bid's $72 per-share price. But in announcing the revised offer Thursday night, Boston Scientific said its initial offer had been $24.6 billion, and that it boosted the total another $330 million in its revised offer, to just under $25 billion. J&J has argued its proposal offers Guidant shareholders greater certainty and a quicker deal. In response, Natick, Mass.-based Boston Scientific offered an enticement in its revised offer. If the transaction doesn't close by March 31, Boston Scientific will increase the offer's price each day thereafter at a daily rate that amounts to an annual interest rate of 6 percent. Boston Scientific also said it will agree "to divest all overlapping assets" if required, but the statement did not elaborate. On Sunday, Boston Scientific announced a separate deal to satisfy antitrust issues by selling Guidant's vascular business for about $4 billion to Abbott Laboratories Inc., contingent on the closing of Boston Scientific's Guidant proposal. J&J has not proposed to sell that piece of Guidant's business if its deal goes through. Some analysts have suggested that could make J&J's offer more attractive to Guidant investors who might not want to see their company split up, even if it is bought out. Earlier Thursday, a major Guidant shareholder said it planned to vote against the J&J offer, even at its revised price. Elliott Associates, a New York hedge fund with about 3 million Guidant shares, or just under 1 percent, wrote a letter to the company's board, accusing J&J of using "heavy-handed and aggressive" tactics. Boston Scientific's latest offer was announced after Guidant shares closed down 4 cents to $70.40 on the New York Stock Exchange. Boston Scientific stock fell about 1.4 percent, or 36 cents, to close at $25.05, and J&J traded down 29 cents to $62.21. J&J is a close No. 2 behind Boston Scientific in the market for drug-coated stents -- metal-mesh devices that are coated with drugs to prevent scar tissue from creating new blockages after artery-clearing surgery. With new entrants expected in that field, Boston Scientific and J&J both are trying to diversify by acquiring Guidant's business in implantable defibrillators and pacemakers, a fast-growing $10 billion market in which neither J&J or Boston Scientific are players. In December 2004, J&J offered $25.4 billion for Guidant, but lowered the amount to $21.5 billion 11 months later because of Guidant's product recalls and regulatory investigations. Since June, Guidant has recalled or issued safety warnings about 88,000 heart defibrillators and almost 200,000 pacemakers. The company also faces numerous lawsuits. J&J has said its larger size gives it greater resources to fix Guidant's problems and sustain long-term growth. J&J posted $47.3 billion in revenue in 2004 to Boston Scientific's $5.6 billion. Boston Scientific, just 27 years old to J&J's 120 years, argues it has better growth prospects. But it has lost some ground recently to J&J in the $6 billion drug-coated stent market, and analysts say Boston Scientific's willingness to bid higher is an admission that it needs new products to spur continued growth. Stent sales helped Boston Scientific more than double its earnings in 2004, but peaked in that year's final quarter. Boston Scientific's shares fell 28 percent last year. biz.yahoo.com