Johnson And Johnson to abandon acquisition

JOHNSON & Johnson may abandon a $25.4 billion (€21.04bn) acquisition of Guidant Corporation because Guidant refused to accept revised terms after it recalled faulty heart defibrillators in June.

Guidant failed to agree to a restructuring of the proposed transaction, New Jersey-based Johnson & Johnson said yesterday in a statement. Guidant, based in Indianapolis, recalled 109,000 defibrillators, setting off regulatory probes and giving competitors an advantage.

“Johnson & Johnson believes that these events have had a material adverse effect on Guidant, and, as a result, that it is not required under the terms of the merger agreement to close,” the company said.

The American Federal Trade Commission yesterday granted antitrust clearance for the transaction after J&J agreed to certain divestitures. The acquisition would be the biggest in Johnson & Johnson’s 119-year history.

Shares of Guidant fell 4%, bringing the stock’s decline since the recalls to 18%.

Johnson & Johnson in December offered $76 in cash and stock for each Guidant share. Guidant declined to $60.43 in early New York Stock Exchange composite trading, 20% below the agreed price. J&J fell 17 cents to $61.73.