Elliott Associates Strongly Disagrees With Guidant's Decision To Accept Johnson & Johnson Lower Offer
12 Janvier 2006 - 10:14PM
PR Newswire (US)
Guidant Shareholder Views J&J Offer As Unacceptable and Intends
NOT to Vote for J&J Transaction NEW YORK, Jan. 12 /PRNewswire/
-- Elliott Associates, L.P. (together with funds under common
management), a shareholder of Guidant Corporation (NYSE:GDT), today
sent a new letter to the Board of Directors of Guidant indicating
their intention NOT to vote for the revised Johnson & Johnson
offer for the Company. Elliott encourages other shareholders to
communicate publicly or privately to Guidant's Board concerning
their views regarding the revised J&J offer and to vote against
the transaction should a superior Boston Scientific offer be
available. Following is the letter sent to Guidant's Board: January
12, 2006 Board of Directors Guidant Corporation 111 Monument Circle
29th Floor Indianapolis, Indiana 46204-5129 Dear Members of the
Board of Directors: I again write to you on behalf of Elliott
Associates, L.P. and Elliott International, L.P. ("Elliott" or
"we"), which collectively own approximately three million shares of
the common stock of Guidant Corporation (the "Company" or
"Guidant"). Elliott is extremely disappointed in your decision to
accept a revised Johnson & Johnson ("J&J") offer (the
"Revised Offer") that clearly fails to maximize shareholder value,
and is appalled at the board's failure to stand up for the
shareholders you are charged to represent. As long as the Boston
Scientific offer (the "Superior Offer") remains firm and available
to Guidant after the date of the vote on the J&J transaction,
Elliott intends NOT to vote for the amended J&J transaction.
Given the obvious superiority of the Superior Offer versus the
Revised Offer, we fail to understand how you could possibly choose
to enter into a revised agreement with J&J given that: -- The
Revised Offer provides 5.5% less consideration to your
shareholders; -- There is no meaningful antitrust risk associated
with the Boston Scientific transaction, a view based on antitrust
advice received from the two separate law firms Elliott has
retained; -- The material adverse condition language in the
proposed Boston Scientific merger agreement is "essentially the
same" as in the current merger agreement between Guidant and
J&J;(1) -- The Boston Scientific transaction can be completed,
most likely, a mere two months after the J&J transaction; --
J&J has shown a history of heavy-handed and aggressive dealings
with Guidant; -- The Boston Scientific/Guidant combination creates
a strong, high growth, diversified medical device company It's
worth noting again that at every turn since the Company's initial
recalls last spring, J&J has dealt with Guidant in a
heavy-handed and aggressive manner. We unfortunately must remind
the board that upon receipt of FTC clearance in November, J&J
portrayed Guidant's business as being broken, stating that the
recalls were, "serious matters affecting both Guidant's short-term
results and long-term outlook" and that it was "not required" to
close the transaction.(2) Moreover, Guidant was then forced to sue
J&J for performance under their agreement while J&J
repeated its negative statements regarding Guidant's business and
promised to "vigorously" defend against the suit.(3) In an apparent
victory for hardball negotiating tactics, J&J finally forced
Guidant to accept its initial revised offer of $63.08 per share, a
17% reduction to the original agreement. Perhaps the board has been
swayed by the distinct size differences between Guidant's two
suitors. While J&J is clearly a larger company than Boston
Scientific, this must be weighed against the fact that, through a
transaction with Boston Scientific, current Guidant shareholders
would participate much more meaningfully in the value created by
having the Guidant assets under a new corporate umbrella. Under the
Boston Scientific transaction, Guidant shareholders would represent
a full 36% of the combined company versus a mere 5% of the new
J&J. Given Boston Scientific's willingness to "continue
discussions with Guidant" and to "vigorously pursue this
transaction" subsequent to your inexplicable and value-destroying
decision, we ask that you declare any subsequent offer with
improved terms from Boston Scientific as superior.(4) We reiterate
that Elliott intends NOT to vote for the proposed merger with
J&J as currently structured, so long as the Boston Scientific
offer remains firm and available to Guidant after the date of the
vote on the J&J transaction. Further, Elliott reserves all
rights with regard to your past and future conduct in connection
with the potential combination of Guidant with J&J or Boston
Scientific. Should you have any questions, please do not hesitate
to contact me. Very truly yours, /s/ Ivan Krsticevic Ivan
Krsticevic Senior Portfolio Manager About Elliott Associates, L.P.
Elliott Associates, L.P. and its sister fund, Elliott
International, L.P. have more than $5.6 billion of capital under
management as of January 1, 2006. Founded in 1977, Elliott
Associates is one of the oldest hedge funds under continuous
management. The Elliott funds' investors include large
institutions, high-net-worth individuals and families, and
employees of the firm. (1) Per Larry Best, CFO of Boston
Scientific, on their conference call January 9, 2006. (2) Johnson
& Johnson press release, November 2, 2005. (3) Johnson &
Johnson press release, November 7, 2005. (4) In its press release
dated January 11, 2006, Boston Scientific states that, "[o]ur
discussions with Guidant are ongoing. We intend to vigorously
pursue this transaction to its completion." DATASOURCE: Elliott
Associates, L.P. CONTACT: Scott Tagliarino, +1-212-506-2999, or
+1-917-922-2364 (cell) for Elliott Associates, L.P.
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