Johnson & Johnson’s proposed $25 billion purchase of US devices company, Guidant [[16/12/04a]], is not going as smoothly as the firms would probably have liked.
Clearance from the US Federal Trade Commission for the deal seems some way off after J&J and Guidant received a request for more information related to their proposed merger. Interestingly, the companies noted that this is the second such request from the FTC, though they added that the requests were expected.
The merger, which is the largest in the medical devices industry and in J&J’s 118-year history, was always going to attract the attention of the FTC with regards to antitrust issues.
In particular, Guidant’s stent business competes with J&J subsidiary Cordis Corp, while the latter and Boston Scientific Corp are the only firms that currently market a drug-coated stent. However, Guidant also plans to enter the drug-coated stent market too, so the FTC may demand divestments in certain areas before it gives its approval.
Analysts do not believe that the FTC request will scupper the agreement and neither do the two firms as they anticipate closing the deal in the third quarter. Guidant shareholders have yet to give their approval to the merger and regulatory authorities in Europe have yet to comment on the proposed deal.