Boston Scientific Corp. on Sunday made a definitive $25-billion offer for rival medical device maker Guidant Corp., standing by an earlier proposal that aims to scuttle another bid for Guidant from Johnson & Johnson.
Boston Scientific's offer is largely in line with its initial Dec. 5 proposal. But the latest proposal from the No. 1 maker of drug-coated heart stents includes a new and related $4.3-billion deal in which the Natick, Mass.-based company would sell Guidant's vascular intervention and endovascular businesses to Abbott Laboratories Inc. if it acquired Guidant.
Johnson & Johnson responded by affirming its existing $21.5-billion bid. The New Brunswick, N.J.-based maker of such diverse items as contact lenses and baby products also touted its size and rich history as selling points to win over Guidant shareholders.
Boston Scientific said the deal with Abbott to sell Guidant's business involving stents and other tiny devices to treat and diagnose patients with circulatory problems was aimed at ensuring antitrust approval for its proposed purchase. Boston Scientific has the top-selling drug-coated stent, and J&J; sells the only other such device on the market.
Guidant's vascular intervention unit includes a facility in Temecula, Calif.
Boston Scientific said it would share rights to Guidant's stent development program with Abbott Park, Ill.-based Abbott, which is also developing its own stent.
Stents are metal-mesh devices that keep coronary arteries propped open after surgery to clear blockages. New models are coated with drugs to prevent scar tissue from forming new blockages.
Boston Scientific would receive $3.8 billion for Guidant's vascular business, plus $500 million when U.S. and Japanese regulators approved the Guidant stent. Abbott also would give Boston Scientific a $700-million loan, payable over five years.
Abbott would gain the right to complete Guidant's project to bring a drug-coated stent to market, then market and license the technology.
Boston Scientific hopes to derail a process begun a year ago when J&J; first bid for Guidant. J&J; reduced its offer in November after Guidant suffered a spate of product recalls and other negative news.
Boston Scientific's latest proposal to create the world's largest cardiovascular products company came after its executives concluded four weeks of due diligence talks with Indianapolis-based Guidant to firm up the initial offer.
"We took a good, hard look, and what we found realistically is the organization was still intact, and the engineering capability," Boston Scientific President and Chief Executive Jim Tobin said. "They clearly have some challenges, but the long-term value proposition is intact."
Guidant said its board would evaluate the Boston Scientific offer. Guidant's board previously urged shareholders to vote for J&J;'s definitive proposal.
Boston Scientific's latest proposal mirrors its initial half-cash, half-stock offer to buy Guidant for about $72 a share. That compares with the roughly $64-a-share price in J&J;'s offer, which totals $21.5 billion, down from J&J;'s initial $25.4-billion offer.
Boston Scientific said its offer represented a 12% premium over the current J&J; offer of $33.25 in cash and 0.493 share of common stock for each Guidant share.
Guidant shareholders are due to vote on the J&J; offer Jan. 31. Boston Scientific hopes it can reach a definitive agreement with Guidant's management before then, which could lead J&J; to sweeten its offer.
Boston Scientific executives said they hoped to close a deal in the first quarter.
Shares of Guidant closed Friday up 65 cents to $67.35, while Boston Scientific rose 37 cents to $26.24. Johnson & Johnson rose 28 cents Friday to 62.60 and Abbott climbed 77 cents to $40.89.