September 27, 2006
J&J Sues Boston Scientific Over Guidant Deal
Johnson & Johnson lost a bidding war for Guidant to Boston Scientific. Boston Scientific brought in Abbott Labs to buy parts of Guidant so that BS could close the deal. J&J argues that Abbott Labs would not have paid for the parts had not Guidant given Abbott confidential information that the J&J agreement with Guidant prohibited. This litigation over the application of a "no-shop" clause is unique and M&A lawyers countrywide will be watching the outcome. We are used to litigation over "no-shop" clauses as claims of breaches of duty by the target firm to its own shareholders (one of whom is a losing bidder who will not bid because such a clause is in place) but not by losing bidders who have the benefit of the clause and lose anyway.
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Dale, It would sadden you if I failed to respond, so let me throw in a few thoughts. Your first complication does nothing to complicate the argument that income and wealth inequality have grown over the course of recent decades, measured by quintiles. Yes, income is a poor proxy for wealth, but one would expect wealth to be distributed even less equally than income. Unless the poorest fifth is somehow also the wealthiest, the complications of measurement do not seem to cast doubt on the general pattern. As for complication #2, it hardly seems uncontroverted that income gains went to the “smart folks.” The average income of college graduates, adjusted for inflation, is down since the 1970s. My guess is that a variety of factors are at work here, but, again, it seems tough to deny the pattern of public policy in recent years. Namely, the party currently in control is doing nothing to directly increase the income share of anyone but the very wealthy among us. Third, I don’t know the data on social mobility, but I’m under the impression that nothing predicts socioeconomic status more reliably than parental socioeconomic status, so, again, I’m not completely sure what the point here is. Finally, you make an interesting point that needs to be taken account of. The “left” to whom you ascribe various thoughts presumably prefers a world in which public policy did more to assure a living wage and secure social benefits - most notably, health care. Your point about the possible rising tide is that supply side public policy may actually produce enough wealth for everyone so that, even with increased inequality, working and middle class Americans enjoy a higher standard of living than they would with a more left-leaning policy because social democracy would lead to a decrease in overall wealth that would overwhelm the value to working and middle class Americans of universal health insurance, well-funded public schools, etc. and all the other benefits that they do not now have. I can only say it seems improbable to me, and no other industrial democracy seems to believe it.
Posted by: Peter Shane | Sep 28, 2006 6:27:10 AM