There is speculation that Johnson & Johnson may walk away from its planned acquisition of medical device company Guidant rather than raise its bid price to compete with a rival offer from Boston Scientific.
In a statement, J&J said it was still committed to the deal, but stressed that its $21.5 billion dollar offer for Guidant represented ‘full and fair value’ for the business, leading observers to the conclusion that it is unwilling to enter into a bidding. Boston Scientific tabled a $25 billion offer for Guidant on Monday.
Both companies are hoping to get their hands on Guidant's pacemaker and defibrillator business, which despite the recent problems - including a major product recall over the summer - represents one of the fastest-growing sectors in medical devices.
Guidant is set to launch a range of cardiac rhythm management (CRM) systems, including wireless versions, which are tipped to be potential big sellers in a market currently valued at $10 billion.
J&J said it expected Guidant shareholders to vote on its bid at a meeting scheduled to take place in the first quarter of 2006. Analysts have suggested that J&J’s hands have been tied by its downgrading of its acquisition offer from an initial level of $25.4 billion, on the grounds that Guidant’s recent recall and other problems had affected the value of the firm.
There have also been suggestions that J&J will try to buy St Jude Medical, the third-placed company in the CRM sector, if the Guidant purchase falls through.