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Johnson & Johnson has filed suit in federal court against Abbott Laboratories and two medical-device manufacturers, seeking at least $5.5 billion for alleged tortious interference and breach of a merger agreement. The New Brunswick-based health-care company charges that a planned $24.2 billion acquisition of Guidant Corp. of Indianapolis was scotched in early January after Guidant leaked confidential information to another manufacturer, Boston Scientific Corp., which ultimately bought Guidant for $27 billion. Harold Paul Weinberger of Kramer, Levin, Naftalis & Frankel in New York, represents J&J in the suit, filed Monday in the Southern District of New York. In December 2004, J&J announced it had structured an agreement to buy Guidant, a heart-device manufacturer. To ease antitrust regulators’ fears, the companies agreed to grant a nonexclusive license for certain Guidant patents to Abbott Labs, a competing health care company based in Columbus, Ohio. J&J says the terms of the deal prohibited Guidant from providing confidential information to any other company unless the third party was making a superior, unsolicited takeover offer. That caveat was designed to keep Guidant from using its agreement with J&J to shop around for higher offers. Last December, Boston Scientific made a $25 billion offer for Guidant, later upped to $27 billion, and, as part of its formal offer on Jan. 8, said it would ease antitrust fears by selling certain Guidant businesses to Abbott. Abbott in turn agreed to make a $700 million loan to Boston Scientific. J&J alleges that Abbott was induced to cooperate when it received confidential information about Guidant. The complaint contends that J&J was alerted to the alleged breach by a comment Boston Scientific CFO Lawrence Best made during a Jan. 9 conference call about its deal with Guidant. The complaint quotes Best as saying, “We had the opportunity to do a certain level of due diligence. Abbott had the opportunity to do a much deeper dive on due diligence.” J&J charges that at some point between the announcement of Boston Scientific’s bid on Dec. 5 and submission of its formal proposal on Jan. 8, “Guidant not only allowed Boston Scientific to conduct due diligence on it [sic] business but also disclosed even more confidential business information to Abbott � which had no independent right to receive any information.” J&J claims that, based on the disclosures, Abbott agreed to enter into a divestiture and financing agreement with Boston Scientific that allowed the company to make an offer for Guidant that “would not require a lengthy and uncertain antitrust review.” In turn, that advantage gave Guidant the opening to accept Boston’s offer as “superior” to J&J’s. Paul Donovan, a spokesman for Boston Scientific and Guidant, said Wednesday, “We believe the suit is meritless. … Throughout this process, we complied with all the terms of the J&J/Guidant merger agreement.” Melissa Brotz, a spokeswoman for Abbott, likewise said the suit is “without merit.” Some outside observers, however, say J&J’s case may have merit, though it won’t be an open-and-shut decision. “We think the prepackaged asset sale was needed to complete the deal financially and to gain FTC [Federal Trade commission] okay,” Robert Gold, a Standard & Poor’s analyst who covers Boston Scientific, said in a research note dated Tuesday. “But we think ABT’s [Abbott's] due diligence may have violated terms of JNJ’s offer for Guidant. We think BSX [Boston Scientific] investment risks are raised by this development.” Late Wednesday, Boston Scientific stock traded at $14.85 a share, up a nickel from Tuesday’s close but off from the 12-month high of $27.82 reached last Dec. 2.

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