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Guidant accepts sweetened J&J bid

US health product giant Johnson and Johnson (J&J) late on Friday agreed to pay more for troubled medical device maker Guidant, raising its bid to US$24.2 billion in the face of a competing offer from a Massachusetts-based rival.

The board of directors of Indianapolis, Indiana-based Guidant Corporation said it has immediately accepted the new terms, signaling their determination to accept the acquisition by the New Brunswick, New Jersey-based conglomerate

Under the deal, which has now been revised at least three times, J&J will pay US$40.52 in cash and 0.493 shares of its common stock for each outstanding share of Guidant stock.

This means Guidant shareholders will receive a total US$71 a share based on Friday's market close.

On Wednesday, J&J agreed to pay for Guidant US$23.2 billion, or US$68.06 per share.

But a rival bidder, Boston Scientific, raised its offer for Guidant from US$72 to US$73 a share on Thursday, forcing J&J into a bidding war.

The deal still has to be approved by Guidant shareholders at a meeting scheduled for Jan. 31, and J&J's sweetened offer appeared to be aimed at winning shareholders' approval.

"This agreement with Johnson and Johnson provides significant financial value and certainty for shareholders," James Cornelius, Guidant chairman and chief executive officer, said in a statement.

He added that the two companies will have the resources to continue to build upon the existing Guidant businesses and pursue "meaningful innovations" to address cardiovascular disease.

J&J chairman and CEO William Weldon indicated the companies are determined to begin to implement integration plans they have been developing throughout the past year.

"Together, we are ready to execute our plans focused on creating the world's broadest and most comprehensive cardiovascular device company that will bring meaningful technology solutions to address this devastating disease," he said.

J&J, which has more than 200 operating companies and employs nearly 115,000 people around the world, began pursuing Guidant in December 2004, first bidding US$76 a share.

It lowered its offer eleven months later to US$63.08, citing concerns about Guidant's financial outlook.

Since June, Guidant has recalled or issued safety warnings for about 88,000 heart defibrillators and almost 200,000 pacemakers, core products that Johnson and Johnson says it plans to shore up after the merger is complete.

Adding to Guidant's woes, US federal prosecutors in Minnesota and Massachusetts have issued subpoenas seeking more information on the recalled devices. And New York Attorney General Eliot Spitzer filed suit against Guidant for allegedly failing to inform doctors about a suspected flaw in one of its recalled heart defibrillators.

Its financial and legal woes notwithstanding, Guidant remains attractive to outside bidders because it owns rights to a line of drug-coated stents -- tiny devices used to open clogged arteries for people suffering from life-threatening heart conditions.
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