Boston Scientific sweetens its offer for Guidant

Boston Scientific Corp. raised its buyout offer for Guidant Corp. by 1.2 percent to $25.3 billion, seeking to beat back Johnson & Johnson's bid for the troubled cardiac device maker.

Boston Scientific's new offer of $73 a share consists of $36.50 in cash and $36.50 in Boston Scientific stock, the company, based in Natick, Mass., said late Thursday in a statement. Guidant on Wednesday accepted a sweetened $23.2 billion J&J purchase for $67.92 a share, $37.25 in cash and 0.493 share J&J stock.

"Our amended offer addresses all of the outstanding issues raised by Guidant's board," said Pete Nicholas, chairman of Boston Scientific, in the statement.

Guidant has until 4 p.m. New York time today to declare the new offer "superior" to the J&J purchase agreement, Boston Scientific said.

The transaction will be the biggest-ever purchase of a medical- device company. The winning bidder will become the No. 2 player behind Medtronic in the almost $10 billion-a-year market for implantable pacemakers and defibrillators, the fastest growing medical technology.

Johnson & Johnson would have five business days to again revise its price after a determination by Guidant directors that the Boston Scientific offer is superior, under the terms of the companies' amended Nov. 14 purchase agreement. Boston Scientific said its bid would remain open until the close of business Jan. 24 in that case.

Indianapolis-based Guidant shares fell 4 cents to close at $70.40 in New York Stock Exchange composite trading, still $2.48 higher than the new J&J bid. Wednesday's closing price of $70.44 was the highest in three months.

The shares of Boston Scientific fell 36 cents to $25.05. The stock lost a third of its value last year.

Johnson & Johnson, based in New Brunswick, N.J., is the 120-year- old maker of products ranging from Splenda artificial sweetener to insulin pumps. Its stock lost 29 cents to $62.21.

The revised agreement between Guidant and J&J added $50 million to the fee that Guidant would owe J&J if Guidant walks away from the deal, bringing the total to $675 million. Boston Scientific previously said it would reimburse Guidant for the fee, when the amount was $625 million.

Boston Scientific Chairman Nicholas said the company addressed the Guidant board's concerns by raising the price, agreeing to divest overlapping assets to ensure antitrust clearance and promising to compensate shareholders if the deal doesn't close by March 31.

Elliott Associates LP, which holds about 3 million shares of Guidant, blasted the Guidant board Thursday for accepting an offer 5.5 percent lower than Boston Scientific's bid.

"Elliott is extremely disappointed in your decision to accept a revised Johnson & Johnson offer that clearly fails to maximize shareholder value, and is appalled at the board's failure to stand up for the shareholders you are charged to represent," wrote Ivan Krsticevic, a senior portfolio manager for Elliott, in a letter to the board.

Krsticevic said Elliott would vote against the J&J merger at a Jan. 31 shareholder meeting called to consider the deal.

If it captures Guidant, Boston Scientific would be the world's biggest maker of heart stents and No. 2 maker of implantable pacemakers and defibrillators behind Medtronic Inc.

Johnson & Johnson, the world's biggest maker of medical devices, first agreed to pay $25.4 billion in December 2004, then cut the price in November by $4 billion after Guidant recalled 109,000 defibrillators linked to at least seven deaths. Boston Scientific made its $25 billion offer Jan. 8.

Recalls of faulty pacemakers and defibrillators hurt Guidant's sales and earnings and led to at least 60 product liability suits and probes by federal regulators. Defibrillators, about the size of an iPod and costing $20,000 to $30,000 each, are implanted in the chest and use electric shocks to restart a faltering heart. Pacemakers, which cost $8,000 to $12,000, send electrical signals to regulate a heartbeat that's too slow.

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