In today's chapter, we see that Boston Scientific has responded to J&J's new-and-improved bid with a small raise of its own. BSX is now offering consideration worth $73 per Guidant share, up a buck from its prior offer and about 7% more than J&J's recent best offer. But while BSX added $0.50 to both the cash and stock component of its bid, making the overall offer still higher than J&J's, J&J is still offering more cash in the deal.
Hoping to both sway Guidant's board and force its hand, BSX attached a lit fuse to this latest offer -- it goes away at 4 p.m. today (Friday the 13th) if the Guidant board doesn't declare it superior. What's more, BSX has offered a guarantee of sorts on a prompt closing -- for each day that passes beyond March 31 without the deal closing, it will up its price for Guidant by an amount equivalent to 6% annual interest. Boston Scientific would also point to its conditional agreement with Abbott Labs (NYSE: ABT ) to sell it Guidant's vascular business for about $4 billion as further evidence that BSX is looking for a prompt, hassle-free close of the deal.
So is this going to be it? I have no idea. These bidding wars can drag on and on (and on and on .) as each company's management convinces itself further that the target is a "must have" asset. Unfortunately, the process doesn't do much good for whoever wins -- the higher the price goes, the more the benefits of the deal swing to the seller from the eventual buyer.
I believe this battle is ultimately to be decided by the 800-pound gorilla that is J&J. When you dance with a gorilla, you stop when the gorilla wants to stop. Simply put, J&J has considerably more resources than Boston Scientific does, and if or when J&J decides it must have Guidant as its own, it will offer more than BSX can, and it wins. As a J&J shareholder, though, I'm hoping that management doesn't get fixated on Guidant and remembers that no deal is always preferable to a bad deal.
For more on this never-ending story:
Fool contributor Stephen Simpson owns shares of Johnson & Johnson but has no financial interest in any other stocks mentioned (that means he's neither long nor short the shares). The Motley Fool has a disclosure policy.