Months after Johnson & Johnson lost a bidding war for medical-device maker Guidant Corp., J&J is suing the winner, Boston Scientific Corp., and Abbott Laboratories, alleging the two companies induced Guidant to breach its agreement with J&J.
New Brunswick, N.J.-based Johnson & Johnson is seeking $5.5 billion in damages, according to the lawsuit, which was filed Monday in U.S. District Court in New York. The lawsuit also seeks reimbursement for court costs, attorney fees and interest.
The suit asks the court to rule that Indianapolis-based Guidant breached the companies’ merger agreement, reached in December 2004 and revised the following November, and that Boston Scientific and Abbott intentionally interfered with the deal and induced Guidant to breach it.
Natick, Mass.-based Boston Scientific trumped Johnson & Johnson’s final offer of $24.2 billion with a $27.2 billion bid to acquire Guidant and its portfolio of stents, defibrillators, pacemakers and other medical devices.
Guidant paid Johnson & Johnson a $705 million breakup fee after it opted to accept Boston Scientific’s offer in late January, ending a nearly two-month-long bidding war. To eliminate possible antitrust snags, Boston Scientific agreed to sell Guidant’s stent and vascular business to Abbott for $4.1 billion in cash and a $900 million loan.
The lawsuit alleges Boston Scientific only succeeded in the takeover battle because “Guidant leaked confidential information to a third party, Abbott, for the purpose of arranging a prepackaged divestiture of significant Guidant businesses to Abbott.”
“Based on these disclosures, which were in material breach of the terms of Guidant’s merger agreement with J&J, Abbott agreed to enter into a divestiture and financing agreement with Boston Scientific, which allowed Boston Scientific to make an offer for Guidant that would not require a lengthy and uncertain antitrust review,” the lawsuit states.
J&J had originally offered to pay $25.4 billion to acquire Guidant, whose shareholders approved that deal. J&J reduced its offer to $21.5 billion after a series of product recalls and legal problems developed at Guidant, and the two companies amended their merger deal on Nov. 14, 2005. The agreement barred Guidant from soliciting other offers and limited its ability to respond to unsolicited bids, according to the lawsuit.
J&J said it would have no comment beyond the court filing.
Paul Donovan, spokesman for Boston Scientific, said his company “complied with all the terms of the J&J/Guidant merger agreement. We believe the suit is meritless, and we expect to demonstrate that in court.”
“We find it curious that J&J has chosen to sue eight months after Boston Scientific entered into a definitive agreement with Guidant, and five months after the transaction closed,” Donovan said.
Melissa Brotz, a spokeswoman for Abbott Laboratories Inc., based in North Chicago, Ill., also said the “lawsuit is without merit.” She declined further comment.
Guidant’s former chief executive officer, James Cornelius, who is now interim CEO at Bristol-Myers Squibb, did not immediately respond to a request for comment.