Shareholders give backing to medical device merger

0

BOSTON (AP) – U.S. and European regulatory approval is the final hurdle for Boston Scientific Corp.’s $27 billion acquisition of Guidant Corp. after shareholders on Friday approved the merger of the medical device makers.

Boston Scientific, which trumped Johnson & Johnson two months ago in a bidding war for Indianapolis-based Guidant, said it expects to close the deal around the middle of April.

In outbidding J&J, Natick-based Boston Scientific agreed to pay Guidant shareholders a total of nearly $4.5 million a day in interest for each day after March 31 that the acquisition fails to win regulatory clearances.

Combined, the companies will manufacture stents, defibrillators, pacemakers and an array of other medical devices.

“We are excited about the prospect of creating a global leader in cardiovascular devices, and we are eager to begin working with our colleagues at Guidant to realize the substantial benefits this combination will bring to shareholders, employees, physicians and patients,” Boston Scientific CEO Jim Tobin said in a statement.

Boston Scientific now awaits antitrust clearances from the Federal Trade Commission and European regulators. FTC spokesman Mitch Katz said Friday that the commission won’t comment on the pending merger.European regulators on Monday pushed back the deadline they set for completing their review until April 18, although a decision could come sooner. The deal also is subject to customary closing conditions.

Interest payments will add up, but analysts say they’re negligible compared to the earnings potential the companies can expect from combining their medical devices portfolios. Boston Scientific expects to nearly double its annual sales from $6.3 billion last year to about $12 billion by 2008.

Analysts, however, have said Boston Scientific won’t see earnings gains from the deal until 2010. And the company must try to regain consumer confidence in Guidant’s products, which have seen sliding sales because of recalls and news that the company withheld information about the faulty products.

Ninety-seven percent of Boston Scientific’s shares and 99 percent of Guidant shares were cast in favor of the merger, in mostly proxy voting, the companies said Friday.

“In Indiana-speak, that’s pretty close to unanimous,” Guidant CEO James Cornelius said of voting in Indianapolis.

Marian Kister, one of only two Guidant shareholders who voted their ballots during the meeting, said she was “very satisfied” with the Boston Scientific deal.

“I had some concerns when it was going with Johnson & Johnson,” the 64-year-old said, but didn’t elaborate.

Boston Scientific on Jan. 25 won a nearly two-month bidding war with J&J to buy Guidant and its business in the fast-growing market for implantable defibrillators. Boston Scientific has projected about one-quarter of its sales will come from Guidant’s pacemakers and defibrillators.

Guidant shareholder Bill Bender, a retired Eli Lilly & Co. manager from Brownsburg, Ind., wasn’t as convinced as Kister but still voted for the acquisition.

“I would have liked to see the thing with Johnson & Johnson come back,” Bender said.

To satisfy concerns that the combined company could command too great a share of the market for heart stents, Boston Scientific has agreed to sell a piece of Guidant’s business including its drug-coated stents to a third company in a deal valued at $6.4 billion. Abbott Laboratories Inc. will pay $4.1 billion in cash, provide a $900 million loan to Boston Scientific and acquire $1.4 billion in Boston Scientific stock.

Guidant shares rose 1 cent to close at $78.06 on the New York Stock Exchange, while Boston Scientific shares lost 27 cents to $23.05 and Abbott shares slipped 17 cents to $42.47.



Associated Press writer Charles Wilson in Indianapolis contributed to this report.

AP-ES-03-31-06 1745EST

Advertisement
SHARE