Indianapolis, IN - The battle to buy Guidant (Indianapolis, IN) may be nearing a bitter finale, with Boston Scientific (Natick, MA) submitting its "definitive offer" to buy the leading medical device company in a deal that represents a premium of approximately 12% above the purchase price offered by competitor Johnson & Johnson (J&J; New Brunswick, NJ). The latter company, meanwhile, insists that it still intends to close the merger it initiated back in 2004. In the latest twist, Boston Scientific has also announced that it plans to sell Guidant's vascular intervention and endovascular businesses to Abbott, with whom it will share rights to Guidant's drug-eluting stent (DES) portfolio.

Guidant shareholders are to vote on the J&J offer on January 31, but if Guidant's board of directors opts in advance for Boston Scientific, J&J executives will have five days to decide whether to sweeten their bid. J&J had originally offered Guidant $25.4 billion in cash and stock in December 2004, then later announced it would abandon the deal if Guidant didn't agree to a lower price that reflected the company's recent device recalls, FDA reviews, and dipping share price. The offer from J&J currently on the table comes in at $21.4 billion. In a statement released yesterday, J&J chair and CEO William C Weldon said: "We continue to believe that the agreed-upon Johnson & Johnson deal represents a better offer for Guidant Corporation, its shareholders, and its employees than the recently announced Boston Scientific proposal."

Since announcing its competing offer in December 2005, Boston Scientific has spent the past month performing due diligence and announced in its own press release yesterday that despite the "challenges" Guidant faces, the company's "underlying value" and "long-term potential" make it worth the price Boston Scientific is offering: a combination of cash and stock worth $72 per Guidant share, or $25 billion in aggregate.

"Compared with the agreement between Guidant and Johnson & Johnson, Boston Scientific is providing superior value to Guidant shareholders today and over the long term," Boston Scientific chair Pete Nicholas said in the statement. "We are confident that the shareholders, employees, and customers of both Guidant and Boston Scientific will realize substantial benefits from this compelling combination."

Boston Scientific has also entered into a binding agreement with Abbott such that, should the Guidant deal go through, Abbott will purchase Guidant's vascular intervention and endovascular business. The rationale for this secondary sale is to fend off any antitrust allegations that might stem from a Boston Scientific-Guidant merger. When J&J first made its move on Guidant, the US Federal Trade Commission stipulated that the merger could go through only if J&J agreed to license Guidant's proprietary rapid-exchange stent-delivery system to Abbott.

In the Boston Scientific-Abbott agreement, Boston Scientific would retain rights to Guidant's DES portfolio, gaining a second DES platform. The total value of the transaction is $4.3 billion, including an up-front payment by Abbott to Boston Scientific of $3.8 billion in cash when the Guidant-Boston Scientific deal is signed and two additional payments of $250 million when the everolimus stent is approved in the US and Japan.

Guidant's rapid-exchange Xience V everolimus-eluting stent is currently still being tested in the SPIRIT II and SPIRIT III pivotal trials. Twelve-month results from SPIRIT I demonstrated a reduction in angiographic late loss at 12 months of 0.23 mm, comparable to one-year results from the early pivotal trials of J&J's Cypher stent and Boston Scientific's Taxus stent.