WSJ.com – J&J Presses Guidant On Takeover Price

WSJ.com – J&J Presses Guidant On Takeover Price (probably requires a subscription)

After talks broke down Tuesday night, Johnson & Johnson said yesterday that Guidant Corp.’s problems with defibrillator recalls could trigger the breakup of their acquisition agreement if terms can’t be renegotiated.

The statement came after the Federal Trade Commission conditionally approved the deal, valued at $25.4 billion when it was announced last December. Guidant responded in a statement that its fundamental business is strong and that Johnson & Johnson is legally obligated to go through with the purchase.

Negotiations broke down, according to a person familiar with the matter, when J&J offered Guidant about $61 to $62 a share, and Guidant demanded around $67 or $68. Johnson & Johnson’s original bid valued Guidant at $76 a share. …

Imagine J&J, thinking they were getting Guidant for a relatively good price. Within six months of the announcement Guidant had to recall 5 lines of pacemakers, and suddenly J&J is looking at their newest acquisition in a very different light.

I would want to renegotiate, too.