Buyer's Remorse?? Boston Scientific Raises Bid for Guidant to $80 a Share

Posted by Jason R. Job

This morning, Boston Scientific (NYSE: BSX) announced that it has raised its former $73 a share bid for Guidant (NYSE: GDT) to $80 a share in hopes to purchase the company. (Reuters story.)  According to the terms of the deal, GDT shareholders would receive $42 in cash and $38 in BSX common stock.  Additionally, BSX has increased the bottom of the price collar and if the deal does not close before March 31, 2006, it has offered to increase its bid by $0.0132 per day between April 1, 2006 and the closing day.  Further, BSX has added Abbott into the mix.  Abbott has agreed to purchase BSX's intervention and endovascular businesses, while agreeing to share rights to Guidant's drug-eluting stent program and has agreed to purchase $1.4 billion in BSX's common stock contingent on the closing of the BSX-GDT acquisition.

As Professor Oesterle has stated many times prior and I completely agree with, there will be some buyer's remorse when GDT finally does sell itself.  Johnson & Johnson began this bidding war at $76 and then dropped its price to the mid 60's before BSX stepped in.  Since then, I have not noticed any "big news" out of GDT, which would make them more profitable.  Basically, this has just become a bidding war between two companies who believe they will be getting the great company to increase potential synergies for their shareholders.  However, the big winner in this whole game will be the shareholders of Guidant who have seen their potential buyout jump from $68 to something around $80 a share.

Update:

Reuters is reporting that GDT is now seeking a $77 per share offer from JNJ in order to preserve their agreement.  As GDT's board meets today to determine whether BSX's $80 bid is superior, JNJ does have 5 days to counter-offer or walk away from the deal and accept the $625 million break-up fee.