Last week we reported on the tenuous status of Johnson and Johnson’s acquisition of Guidant. Specifically, we asked, “Will J&J actually buy Guidant?” It seems the answer will be decided in the United States District Court for the Southern District of New York, where Guidant (according to their press release) has field suit…
…seeking specific performance of Johnson & Johnson’s obligation to complete its acquisition of Guidant in accordance with the Merger Agreement between the parties dated as of December 15, 2004. Guidant also intends to ask the court to expedite pre-trial discovery in order to resolve the matter as quickly as possible.
Not surprisingly, J&J has a statement of their own:
Johnson & Johnson believes that it is not required under the terms of the merger agreement to close the Guidant transaction. The Company views the previously announced product recalls at Guidant and the related regulatory investigations, claims and other developments as serious matters affecting both Guidant’s short-term results and long-term outlook. Johnson & Johnson believes those events have had a material adverse effect on Guidant and, as a result, that it is not required to close the acquisition.
The stage is set for an epic legal battle. For some reason, both companies’ stock prices rose relative to their opening price today (apparently protracted legal battles are now good for both parties involved). We can only imagine how awkward things will be if Guidant wins and its employees are thrust into the unwelcome arms of J&J.