J&J to Face Off With Boston Scientific in Court Over Guidant Deal

Johnson & Johnson will face off with Boston Scientific in a New York federal court Thursday, the first session of a multibillion dollar trial over a failed merger with cardiovascular devicemaker Guidant.

J&J offered $21.5 billion for Guidant in 2004, agreeing to sell a portion of Guidant's business to Abbott Laboratories to satisfy antitrust concerns. The deal included a “no-solicitation clause” that prevented Guidant from seeking better offers, although the company could entertain unsolicited bids.

Before the deal closed, Boston Scientific offered $25 billion for the company and also agreed to sell certain assets to Abbott, and eventually purchased Guidant for $27 billion. This convinced J&J that Guidant had violated the agreement, because Abbott would not otherwise have signed on to the deal, leaving Boston Scientific unable to win what became a bidding war, J&J said.

J&J received a $705 million termination fee and sued Guidant and Abbott in 2006, claiming breach of contract. Abbott has since been dismissed as a defendant.

J&J is seeking in excess of $5 billion in damages plus interest from Boston Scientific, which maintains that Guidant did not knowingly violate the agreement. J&J will need to prove that it lost money as a result of the failed acquisition, which may be a problem since the company’s stock has since soared, while Boston Scientific’s has fallen. — Kellen Owings

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