Sign in Subscribe
Medical equipment industry

Johnson & Johnson Clears EU Hurdle in Acquisition of Guidant Corp.

Strategic Insights

— 2 min read

Johnson & Johnson, a pharmaceutical and consumer goods company, has cleared a major hurdle in its $25.4 billion acquisition of Guidant Corp. The European Union's executive commission has approved the deal, provided that operations in some niche markets for cardiovascular devices are sold to guarantee fair competition in the EU's 25 member states. This decision follows several recalls of Guidant's defibrillators and pacemakers, which have been linked to at least two patient deaths. The acquisition is expected to be completed after the U.S. Federal Trade Commission makes a decision, which is expected in October.

Key Takeaways:

  • The European Union's executive commission has approved Johnson & Johnson's acquisition of Guidant Corp., conditioned on the sale of operations in some niche markets for cardiovascular devices.
  • The acquisition is valued at $25.4 billion and is expected to be completed after the U.S. Federal Trade Commission makes a decision, which is expected in October.
  • Guidant has recalled 88,000 defibrillators and 28,000 pacemakers due to malfunctions, which have been linked to at least two patient deaths.
  • The recalls have raised concerns about the financial impact on the companies involved and the value of the deal.
  • Johnson & Johnson has agreed to divest some businesses in Europe, including its Cordis unit, and Guidant is required to sell its endovascular products business in Europe.
  • The deal has already been approved by Guidant shareholders, but did not require approval by J&J stockholders.
  • Hemant Shah, an independent health-care analyst, believes the acquisition is still on track, but warns that the financial impact of the recalls could change the value of the deal.

Statistics:

  • $25.4 billion: the value of Johnson & Johnson's acquisition of Guidant Corp.
  • 88,000: the number of defibrillators recalled by Guidant Corp.
  • 28,000: the number of pacemakers recalled by Guidant Corp.
  • 2: the number of patient deaths linked to faulty defibrillators.
  • 10%: the percentage increase in J&J shares price after the EU approval.
  • 28 cents: the increase in J&J shares price.
  • $62.53: the closing price of J&J shares.
  • 55 cents: the decrease in Guidant shares price.
  • $71.10: the closing price of Guidant shares.

Sources:

  • The Associated Press
  • Jeff Leebaw, Johnson & Johnson spokesman
  • Steve Tragash, Guidant spokesman
  • Hemant Shah, independent health-care analyst at HKS & Co.
  • European Union's executive commission
  • Johnson & Johnson's press release
  • Guidant's press release
  • New York Stock Exchange (NYSE)

Read more