Johnson & Johnson and Guidant Corporation come to agreement over reduced
Guidant acquisition value
16 November 2005
New Brunswick, NJ, USA. Johnson & Johnson and Guidant Corporation have
announced that they have entered into a revised agreement by which Johnson &
Johnson will acquire Guidant for a net $19 billion.
The companies originally entered into an agreement in December 2004 that
valued Guidant at $25.4billion. This ran into trouble after product recalls
earlier this year and lawsuits earlier this month sent Guidant's share value
plunging. The deal was due to be closed earlier this month after the Federal
Trade Commission (FTC) conditionally approved the proposed acquisition on 2
November 2005.
Johnson & Johnson's share price shot up in value from Monday's close of
60.51 to finish at 62.83 at Tuesday's close. Guidant shares also rose
sharply from a Monday night closing value of 57.75 to 62.5 at close on
Tuesday.
The revised agreement has been approved by the boards of directors of
Johnson & Johnson and Guidant Corporation. Guidant Corporation shareholders
must also vote on the revised agreement. Pending Guidant shareholder
approval, the companies expect to close the transaction in the first quarter
of 2006.
Expressing satisfaction that the companies had reached an agreement,
William C. Weldon, Chairman and Chief Executive Officer, Johnson & Johnson,
said: "We are delighted that our companies have reached an accord. Our
agreement demonstrates that we remain committed to the goal of together
building an extraordinary cardiovascular business that can deliver better
medical options sooner to millions of patients."
James M. Cornelius, Chairman of Guidant Corporation, said: "Our
enthusiasm for this agreement and its potential continues. This agreement
makes sense for Guidant shareholders and employees. It amplifies the
opportunity for us to do more for patients with cardiovascular disease
through a union with Johnson & Johnson."
On November 2, 2005, the Federal Trade Commission (FTC) conditionally
approved the proposed acquisition. In connection with FTC clearance, Johnson
& Johnson has entered into agreements to divest certain rights and assets of
its businesses in drug-eluting stents, endoscopic vessel harvesting
products, and anastomotic assist devices. The agreements are subject to
closing of the Guidant acquisition.
Previously, as part of the European Commission's clearance of the deal on
August 25, 2005, Johnson & Johnson agreed to divest the Cordis steerable
guidewires business in Europe and the Guidant Endovascular Solutions
business in Europe, and is in the process of identifying purchasers for
these businesses.
Links
The companies' full statement about the new agreement:
http://www.jnj.com/news/jnj_news/20051115_064824.htm
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