INDIANAPOLIS – Boston Scientific Corp. (BSX) offered to pay about $25 billion for rival medical device maker Guidant Corp. (GDT) on Monday, topping by more than $3 billion what Johnson & Johnson (JNJ) agreed to pay for Guidant last month.
Guidant shares climbed nearly 10 percent in early trading on news of the brewing bidding war.
Boston Scientific, which makes heart devices, offered in a letter to Guidant's chairman to pay a combination of cash and stock worth about $72 per Guidant share.
Boston Scientific Chairman Pete Nicholas said the company was interested in adding Guidant's pacemaker and defibrillator products.
The two companies are now among the leaders in heart stents, metal-mesh devices surgically inserted to keep coronary arteries propped open after surgery to clear blockages.
"This transaction provides a unique opportunity to advance our strategy to further diversify and to expand the growth markets we serve," he said. "Combining the resources of two of the earliest pioneers in the field of interventional medicine promises a continuation of the prolific innovation that has enabled major advances in the treatment of so many diseases."
The offer is about 14 percent above the current value of Johnson & Johnson's renegotiated cash and stock deal for Indianapolis-based Guidant which accepted the revised offer on Nov. 15.
At the time, the J&J offer was worth $63.08 per Guidant share, or $21.5 billion, but the value has since risen to about $63.43 per share, based Friday's closing price of Johnson & Johnson stock. Johnson & Johnson makes an assortment of medical and health care products.
A Johnson & Johnson spokesman did not immediately return a call seeking comment Monday morning.
Johnson & Johnson and Guidant renegotiated their deal when J&J considered pulling its original offer of $76 a share made last December after Guidant suffered through the recall of thousands of implantable heart devices over the summer.
Since June, Guidant has recalled or issued warnings about 88,000 heart defibrillators — including its top seller, the Contak Renewal 3 — and almost 200,000 pacemakers because of reported malfunctions.
Guidant had filed a federal lawsuit to force J&J, based in New Brunswick, N.J., to complete a original takeover agreement. The revised J&J deal was worth about $4 billion less than its initial offer.
The Boston Scientific offer consists of $36 in cash and $36 worth of its shares for each share of Guidant stock. J&J is offering $33.25 in cash and 0.493 share of Johnson & Johnson common stock for each Guidant share.
Shares of Guidant surged $6.08, or 9.8 percent, to $67.90 a share on the New York Stock Exchange.
Johnson & Johnson shares fell 35 cents to $60.86 on the NYSE, while Boston Scientific shares fell $1.36, or 5 percent, to $25.97.