Johnson & Johnson may be considering an increased bid for medical device maker Guidant as it tries to prise the company from the clutches of rival Boston Scientific, according to newswire reports.
The US drugmaker is negotiating with Guidant’s management in the wake of Boston Scientific’s formal $25 billion bid, which was tabled on Sunday, in advance of a Guidant shareholder meeting scheduled for later this month. One major Guidant shareholder has already said publicly it favour's the latter deal.
Last week, management at Guidant recommended approval of the $21.4 billion J&J offer as the only formal offer in the frame at that time, and Boston Scientific raced to get its own bid firmed up and under consideration.
If Guidant’s shareholders come down on the side of Boston Scientific’s bid, J&J will have just five days to come back with an improved offer - something that will be hard to justify given that the drugmaker has already scaled back the amount it is prepared to pay in the wake of a major recall that affected Guidant's implantable cardiovascular defibrillator (ICD) business last year.
Boston Scientific’s formal bid came just ahead of its fourth-quarter results statement, headed by a 3% drop in revenues as it faces competition in the cardiovascular stent business. Notably, its drug-eluting stent Taxus is feeling the effects of Cypher from J&J, adding to the rivalry between the two Guidant suitors.
Guidant sales slump in 4Q
Meanwhile, as expected fourth-quarter revenues at Guidant fell 15% as it felt the continued effects of the ICD recall.
Guidant said preliminary fourth-quarter sales were about $828 million, but came in a little higher than its expectations because ICD sales in the USA were not hit as hard by the recall as had been feared.
US sales of ICDs came in at $272 million, a drop of 23%, while worldwide turnover of the products was down 19% to $372 million.
Guidant also announced that it has received a follow-up letter from the US Food and Drug Administration (FDA) related to the compliance problems at one of its manufacturing plants, which first emerged in late December.
No additional issues are raised by the new letter, and Guidant insists that remedial actions will resolve the deficiencies ahead of a follow-up FDA inspection in mid-2006.