Guidant accepts Boston Scientific's $27bn, Johnson & Johnson bows out

26 January 2006

Natick, MA and Indianapolis, IN, USA. Boston Scientific Corporation (NYSE: BSX) and Guidant Corporation (NYSE: GDT) have announced that the Board of Directors of Guidant has unanimously approved and entered into the merger agreement provided to Guidant by Boston Scientific on January 17, 2006. Under that agreement, Boston Scientific will acquire all the outstanding shares of Guidant for a combination of cash and stock worth $80 per Guidant share, or approximately $27 billion in aggregate.

Prior to entering into this agreement with Boston Scientific, Guidant terminated its merger agreement with Johnson & Johnson. In accordance with the terms of Guidant's agreement with Boston Scientific, Boston Scientific will reimburse Guidant for the termination fee of $705 million payable to Johnson & Johnson as a result of the termination. Guidant also announced that the January 31, 2006 special meeting of Guidant shareholders to vote on the merger with Johnson & Johnson has been cancelled. Johnson & Johnson said that it had "determined not to increase its last offer for Guidant Corporation, because to do so would not have been in the best interest of its shareholders."

As a highly diversified company with leading positions in growth markets, Boston Scientific/Guidant will be one of the world’s major medical device companies, with total revenue in 2006 of nearly $9 billion.

“Guidant and Boston Scientific share an entrepreneurial spirit, highly talented employees, strong customer relationships and an ability to pioneer lifesaving therapies for patients around the world,” said Pete Nicholas, Chairman of Boston Scientific. “Shareholders will benefit from the significant upside potential of the combined company, while doctors and their patients will continue to receive the most technologically advanced and highest quality medical devices and therapies. The resources and capabilities of the combined company will allow us to make further investments in our current businesses as well as pursue new revenue opportunities.”

“We believe the transaction and the strategic rationale for this combination are in the best interests of our patients, employees, customers and shareholders — reflecting the full value of our firm,” said Jim Cornelius, Chairman and Chief Executive Officer of Guidant. “The combination of these two companies provides faster, more consistent revenue growth opportunities to shareholders. We want to express our appreciation to our employees who have been dedicated to building this great company, and we all look forward to the future.”

“We are excited about combining the talent and experience of Boston Scientific and Guidant employees,” said Jim Tobin, President and Chief Executive Officer of Boston Scientific. “We look forward to working with Guidant to complete the transaction quickly and to creating a global leader in cardiovascular devices.”

The transaction is subject to customary closing conditions, including clearances under the Hart-Scott-Rodino Antitrust Improvements Act and the European Union merger control regulation, as well as approval of Boston Scientific and Guidant shareholders. The transaction is not subject to any financing condition. Boston Scientific expects to complete the transaction by the end of the first quarter of 2006.

As previously announced, Boston Scientific has entered into an agreement with Abbott (NYSE: ABT) under which Boston Scientific has agreed to divest Guidant’s vascular intervention and endovascular businesses, while agreeing to share rights to Guidant’s drug-eluting stent program. Under its agreement with Abbott, Boston Scientific will receive $6.4 billion in cash from Abbott on or around the closing date of the Guidant transaction. This amount consists of $4.1 billion in purchase price for the Guidant assets, a loan of $900 million, and Abbott’s agreement to acquire $1.4 billion of Boston Scientific common stock. Boston Scientific and Guidant believe that Boston Scientific’s agreement with Abbott will enable Boston Scientific and Guidant to rapidly secure antitrust approvals for the proposed transaction.

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