J&J to sue Boston

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Following Boston Scientifics’ acquisition of Guidant from under the noses of its arch-rival in the drug-eluting stent market, Cordis (Johnson & Johnson), the latter is suing Boston Scientific and Abbott Laboratories, alleging the two companies breached J&J’s merger agreement with Guidant.

The Boston/Guidant takeover was undoubtedly one of the most protracted takeovers in medical device history and just as all the drama that accompanied the acquisition seemed to have died down, J&J has filed a lawsuit for US$5.5 billion in damages, claiming Guidant breached its merger agreement with J&J (reached in December 2004 and revised the following November), and that Boston Scientific and Abbott intentionally interfered with the deal and induced Guidant to breach it.

Boston Scientific finally trumped J&J’s final offer of US$24.2 billion with a US$27.2 billion bid to acquire Guidant and its portfolio of stents, defibrillators, pacemakers and other medical devices, in January 2006.

Guidant paid J&J a US$705 million breakup fee after it opted to accept Boston Scientific’s offer, ending a nearly two-month-long bidding war. To eliminate possible antitrust snags, Boston Scientific agreed to divest Guidant’s stent and vascular business to Abbott for US$4.1 billion in cash and a US$900 million loan.

Paul Donovan, spokesman for Boston Scientific, said his company “complied with all the terms of the J&J/Guidant merger agreement. We believe the suit is merit less, and we expect to demonstrate that in court. We find it curious that J&J has chosen to sue eight months after Boston Scientific entered into a definitive agreement with Guidant, and five months after the transaction closed.”

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