Tuesday, January 17, 2006
Good to Be Guidant - Redux
After J&J's last offer, I said I would be disappointed if BSX didn't pull out the stops and make its best offer. It looks like they've done that, coming in WAY over the top with a deal valued at over $27B. That's something like a $3B increase over J&J's last offer, and for J&J to be competitive here they will need to go over the $25B they originally offered oh so long ago. J&J won't need to go to $27B, since they've still got the advantages of time and certainty of closing, and because the market is likely to take BSX stock down pretty viciously for fear of what this merger will do to the company's credit ratings. Still, it will take more than $25B for J&J to win Guidant, meaning the whole exercise of J&J declaring the MAC clause was a colossal strategic blunder, costing J&J time, money and quite possibly the opportunity to make this acquisition. Sometimes you've got to leave a few dollars on the table in order to make sure you get what you're after.