FTC CLEARS J&J ACQUISTION OF GUIDANT; J&J MULLS ENDING DEAL

The FTC has granted conditional approval of Johnson & Johnson's (J&J) proposed $25.4 billion purchase of Guidant, but J&J indicated it might not close the deal in light of Guidant's recent product recalls and regulatory investigations.

The FTC's conditional approval of J&J's planned purchase requires the firm to divest products in three medical device markets: drug eluting stents, endoscopic vessel harvesting devices, and proximal anastomotic assist devices, which are used in cardiac surgery.

But J&J followed the FTC's announcement with its own statement indicating the deal might be in jeopardy. J&J continues to view previously announced product recalls at Guidant and related regulatory investigations, claims and other developments as "serious matters affecting both Guidant's short-term results and long-term outlook," the firm said in a statement.

These events have had a "material adverse effect on Guidant, and, as a result, that it is not required under the terms of the merger agreement to close the Guidant acquisition," J&J said.

Guidant has had to recall or issue warnings recently on thousands of implantable cardioverter defibrillators and pacemakers. The firm also is facing a wave of liability lawsuits and a reported FDA criminal investigation into the company's conduct. In addition, Guidant was one of three devicemakers recently targeted by a Justice Department probe into the sales practices of the cardiac device industry.

But Guidant has defended the terms of the proposed acquisition, arguing that recent events do not reflect the company's long-term viability.