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Medical device maker Guidant Corp. said Wednesday it still believed its acquisition by Johnson & Johnson makes strategic sense, the day after the company’s stock plummeted when a J&J executive said it was considering alternatives to the $25.4 billion deal. “While neither company depends on this transaction for its continued future success, Guidant believes that the strategic rationale for combining the two companies is as strong today as when we entered into the merger agreement,” CEO Ronald Dollens said in a statement. During J&J’s quarterly earnings report Tuesday, CFO Robert J. Daretta said the New Brunswick, N.J.-based company was considering “alternatives” to its planned acquisition of Guidant. The deal was set to close in September, but has been in question because of Guidant’s repeated recalls of pacemakers and defibrillators. Daretta’s statement was the first public indication that the acquisition may be in trouble, rather than just delayed. J&J spokesman Jeffery Leebaw declined to comment Wednesday. According to documents filed with the Securities and Exchange Commission, if J&J opts to walk away from the deal, it would have to pay Guidant $700 million. Since June, Guidant has recalled or issued warnings about 88,000 heart defibrillators — including its top seller, the Contak Renewal 3 — and almost 200,000 pacemakers because of reported malfunctions. The company faces a slew of lawsuits from patients and shareholders, as well as a reported criminal investigation by the U.S. Food and Drug Administration. In a research note released Wednesday morning, Sara Michelmore, an analyst with SG Cowen & Co. said this week’s announcement may signal a push from J&J to renegotiate the deal. Michael M. Gaba, a health care lawyer with the Washington firm Holland & Knight, said he doesn’t think the acquisition necessarily will be scuttled. “I don’t think that the deal is dead, but I think it’s perfectly reasonable for J&J to be renegotiating,” he said. “It’s basically going to be inheriting all of the regulatory problems that Guidant is facing right now. They’re at a fork in the road. It could result in an adjusted sales price or it could lead to the deal getting killed.” Guidant said it would decline further comment on the acquisition deal until the Federal Trade Commission approves the transaction, which the companies expect to happen this month. The takeover was first announced Dec. 15 and was overwhelmingly approved by Guidant shareholders April 27. Guidant’s stock is down from its adjusted closing price of $71.75 on Dec. 15. Guidant shares rose 54 cents to $64.64 in afternoon trading Wednesday on the New York Stock Exchange. The shares plunged $8.28, or 11.4 percent by the close of trading on Tuesday, but then clawed back 10 cents in after-hours dealing. The stock’s 52-week high is $75.15. Copyright 2005 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.

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