GDT Guidant Corp

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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