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Pharmaceutical industry

Elliott Associates Backs Boston Scientific's $25 Billion Offer for Guidant

Strategic Insights

— 2 min read

Elliott Associates, a major Guidant shareholder, has come out in favor of Boston Scientific's $25 billion offer, valuing the Indianapolis-based device maker at $72 a share. The move is a critical development in the takeover battle for Guidant, as it marks the first significant endorsement of Boston Scientific's bid. In a two-page letter, Ivan Krsticevic, senior portfolio manager at Elliott Associates, stated that the Johnson & Johnson offer of $64 a share "meaningfully undervalues Guidant." Elliott Associates owns 3 million Guidant shares and has $5.6 billion in capital under management.

Key Takeaways:

  • Elliott Associates, a 3 million-share Guidant shareholder, publicly supports Boston Scientific's $25 billion offer, valuing the company at $72 a share.
  • The company's board is considering Boston Scientific's takeover proposal, and Elliott Associates has called on other shareholders to contact the board in support of the offer.
  • Johnson & Johnson's $64-a-share offer was deemed "undervalued" by Ivan Krsticevic, senior portfolio manager at Elliott Associates, who stated that a higher offer of at least $71 a share would be comparable to Boston Scientific's bid.
  • Guidant's preliminary fourth-quarter sales fell 15% from a year ago, to $828 million, due to decreased sales of implantable defibrillators.
  • The FDA regulatory issues at Guidant's defibrillator and pacemaker facility in St. Paul, Minn., are ongoing, with a follow-up letter received by the company and a next inspection scheduled for mid-2006.
  • Guidant expects to answer the FDA's warning letter this month and has reported a slightly better sales figure than previously estimated, at $828 million.
  • Elliott Associates, with $5.6 billion of capital under management, is strong advocate for the Boston Scientific offer and has called for other shareholders to get behind the bid.

Statistics:

  • $25 billion: Value of Boston Scientific's offer for Guidant
  • $72 a share: Value of Boston Scientific's offer for Guidant shares
  • $21.5 billion: Value of Johnson & Johnson's offer for Guidant
  • $64 a share: Value of Johnson & Johnson's offer for Guidant shares
  • 3 million: Number of Guidant shares owned by Elliott Associates
  • $5.6 billion: Capital under management by Elliott Associates
  • $828 million: Guidant's preliminary fourth-quarter sales
  • 15%: Decline in Guidant's fourth-quarter sales compared to last year
  • Mid-2006: Scheduled date of the FDA's next inspection of Guidant's defibrillator and pacemaker facility

Sources:

  • The Indianapolis Star, "Elliott Associates backs Boston Scientific's $25 billion offer for Guidant"
  • Knight Ridder/Tribune Business News, "Guidant's board to consider Boston Scientific takeover proposal"
  • Guidant Corp. press release, "Guidant Reports Fourth-Quarter Sales"

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