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news.Guidant Corporation has agreed to be taken over by Boston Scientific for $27.2 billion, after Johnson & Johnson declined to raise its offer for the heart device maker.
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The victory for Boston will give the company access to the cardiovascular device market said to be worth in excess of $10 billion. Analysts predict that J&J will now look elsewhere for acquisitions to support its future growth with St Jude Medical a much talked about potential target.
Johnson & Johnson said that it had determined not to increase its last offer for Guidant because to do so “would not have been in the best interest of its shareholders”.
Guidant must now pay a $705 million breakup fee to J&J in order to terminate the previous merger agreement between the companies. However, Guidant says that it will be reimbursed this fee from Boston.
The successful $27.2 billion bid from Boston represents $80 per Guidant share made up of a combination of $42.00 in cash and $38.00 in Boston Scientific common stock. The boards of directors of Boston Scientific and Guidant have given their respective approvals to the transaction, which is now subject to customary closing conditions and shareholder approval.