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Although the Federal Trade Commission conditionally on Wednesday approved Johnson & Johnson’s proposed $25.4 billion acquisition of Guidant Corp., the New Brunswick, N.J., diversified medical company may back out of the deal. Under the FTC’s terms, J&J must grant to a third party a non-exclusive, irrevocable license, to make and sell drug eluting stents with the Rapid Exchange delivery system. The company must also divest to a third party its endoscopic vessel harvesting product line, which is used in cardiovascular bypass surgery, and end its agreement to distribute Novare Surgical System Inc.’s proximal anastomotic assist device, which also is used in bypass surgery. Major terms of the approval have been expected for months but uncertainty over the deal has increased because Guidant product recalls have called into question the value of the company and J&J’s willingness to stick with its initial buyout price. J&J announced Wednesday that it might abandon the deal if the two companies cannot restructure the terms. The FTC also approved J&J’s plans to license the drug eluting stent line to Abbott Laboratories Inc. The endoscopic vessel harvesting product line will be sold to Datascope Corp., although J&J may supply Datascope with necessary products for up to two years to ensure the buyer has time to receive required regulatory approvals. Finally, the FTC said it expects Novare to find a new distribution partner for the proximal anastomotic assist device “within the next couple of months.” “The consent order announced by the Commission today preserves competition in the U.S. markets for three important medical device products,” said Susan Creighton, director of the FTC’s Bureau of Competition. “As a result of the agreement announced today, J&J and Guidant will be able to proceed with their transaction while the benefits that competition brings to patients for these potentially life-saving products and technologies will be preserved.” Without the conditions the FTC said the merger would have unlawfully reduced competition by removing Guidant as a player in those three product markets, each of which is highly concentrated. Copyright �2005 TDD, LLC. All rights reserved.

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