Johnson & Johnson says it is continuing to work towards closing its $25.4 billion dollar acquisition of Guidant [[26/05/05c]], in spite of news that the US devices firm is recalling some 50,000 of its defibrillators after two models were linked to a total of 43 failures and two deaths.
Guidant said in a statement that it was making the withdrawal after discovering that certain of its defibrillators could develop a short circuit. The devices are surgically implanted in people who have a type of heart disease that creates the risk of a life-threatening abnormal heart rhythm, or arrhythmia – short circuiting could result in their inability to deliver an essential electrical shock when needed. Guidant also recently informed the US Food and Drug Administration that it was recalling another set of defibrillator devices, which are subject to a memory error that may affect device performance.
Although J&J seems to be standing by the proposed purchase, which will give it a leg up in the lucrative market for pacemakers and defibrillators, it acknowledged that the news was “serious” and said it was “engaged in discussions with Guidant to help the company understand the issues.”
The news certainly caused jitters on the stock markets, with Guidant’s share price sliding 3% yesterday as more than five times the average number of shares were traded.