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J&J and Guidant seen close to deal

Johnson & Johnson aims to seal a purchase of Guidant Corp. without immediately jettisoning the medical device maker's stent operations, sources familiar with the situation said on Thursday.
/ Source: Reuters

Johnson & Johnson aims to seal a purchase of Guidant Corp. without immediately jettisoning the medical device maker's stent operations, sources familiar with the situation said on Thursday.

A deal could be announced as early as Monday, although the negotiations could collapse or linger into next week, the sources cautioned. Media reports said a deal could be worth more than $24 billion.

Health care and consumer products company J&J and Guidant have declined to comment.

J&J's primary motivation for the deal would be to gain access to Guidant's fast-growing line of implantable defibrillators and pacemakers that regulate heart beat, analysts said.

Two companies also have expertise in stents, which prop open diseased heart arteries.

Guidant's bare-metal stents — combined with J&J's heart drugs — could create a next-generation drug-coated stent aimed at challenging the leading product from Boston Scientific Corp., analysts said.

Concerns about potential anti-trust scrutiny of the overlapping stent operations had prompted the companies to explore spinning off or immediately selling some of Guidant's assets, sources familiar with the situation said.

But instead of creating a multi-step deal or lining up a buyer now, the companies believe they can shed those operations later, if necessary, after regulators weigh the merger, one source said.

"There will be scrutiny on this but it's not insurmountable or something that must be addressed now," said one source familiar with the situation.

The structure of the potential deal could still change, the source cautioned.

Analysts had seen Abbott Laboratories Inc. as a logical buyer for that business, but Abbott said on Tuesday it had no interest in Guidant or in expanding its stent operations through acquisitions.