JOHNSON & JOHNSON, GUIDANT AGREE TO MERGER

Johnson & Johnson and Guidant have agreed to a revised merger between the companies for nearly $4 billion less than J&J had originally proposed.

Under the terms of the revised agreement, J&J will pay $21.5 billion for Guidant, down from the $25.4 billion that J&J had originally offered. Under the terms of the revised agreement, the transaction has an estimated net acquisition cost of $19 billion, based upon Guidant's approximately 340 million fully diluted shares outstanding, net of estimated cash on hand at the time of closing. Pending shareholder approval, the companies expect to close the transaction in the first quarter of 2006.

The deal had looked like it might not happen because of J&J's concerns with Guidant's legal troubles. Guidant has been under fire for its handling of problems with its implantable cardioverter defibrillators. Rumors that J&J may pull out of the merger led Guidant to sue to complete the purchase.

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