Johnson & Johnson and Guidant Corporation come to agreement over reduced Guidant acquisition value

16 November 2005

New Brunswick, NJ, USA. Johnson & Johnson and Guidant Corporation have announced that they have entered into a revised agreement by which Johnson & Johnson will acquire Guidant for a net $19 billion.

The companies originally entered into an agreement in December 2004 that valued Guidant at $25.4billion. This ran into trouble after product recalls earlier this year and lawsuits earlier this month sent Guidant's share value plunging. The deal was due to be closed earlier this month after the Federal Trade Commission (FTC) conditionally approved the proposed acquisition on 2 November 2005.

Johnson & Johnson's share price shot up in value from Monday's close of 60.51 to finish at 62.83 at Tuesday's close. Guidant shares also rose sharply from a Monday night closing value of 57.75 to 62.5 at close on Tuesday.

The revised agreement has been approved by the boards of directors of Johnson & Johnson and Guidant Corporation. Guidant Corporation shareholders must also vote on the revised agreement. Pending Guidant shareholder approval, the companies expect to close the transaction in the first quarter of 2006.

Expressing satisfaction that the companies had reached an agreement, William C. Weldon, Chairman and Chief Executive Officer, Johnson & Johnson, said: "We are delighted that our companies have reached an accord. Our agreement demonstrates that we remain committed to the goal of together building an extraordinary cardiovascular business that can deliver better medical options sooner to millions of patients."

James M. Cornelius, Chairman of Guidant Corporation, said: "Our enthusiasm for this agreement and its potential continues. This agreement makes sense for Guidant shareholders and employees. It amplifies the opportunity for us to do more for patients with cardiovascular disease through a union with Johnson & Johnson."

On November 2, 2005, the Federal Trade Commission (FTC) conditionally approved the proposed acquisition. In connection with FTC clearance, Johnson & Johnson has entered into agreements to divest certain rights and assets of its businesses in drug-eluting stents, endoscopic vessel harvesting products, and anastomotic assist devices. The agreements are subject to closing of the Guidant acquisition.

Previously, as part of the European Commission's clearance of the deal on August 25, 2005, Johnson & Johnson agreed to divest the Cordis steerable guidewires business in Europe and the Guidant Endovascular Solutions business in Europe, and is in the process of identifying purchasers for these businesses.


The companies' full statement about the new agreement:

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