Wednesday, January 25, 2006

No Deal Fever

Good to see that J&J didn't succumb to "deal fever" and chase the $27B proposal made by BSX. Still, as I posted last week, J&J could have had Guidant for several billion dollars less had they not overestimated their leverage in exercising the MAC clause. Perversely, Guidant's problems post-signing - which precipiated J&J exercise of the MAC clause - ended up creating $2B in shareholder value. It's a strange world.

2 comments:

Lorne said...

Most of the deals I've done are public to private, so I've rarely needed to use a MAC. But when I have, I've always walked away.

Likewise, I've been involved in the sale of a public company in which a MAC was exercised and the price lowered; however, another bidder quickly swooped in, topped the revised offer and won. Given that the MAC is a great tool to use when you need to walk away, I wonder how often it has been used successfuly to lower the price?

Dave said...

Intereting comment Lorne.