Guidant files suit against J&J to complete merger
J&J contends the deal is now void because of Guidant's financial and legal problems.
Guidant, based in Indianapolis, disclosed yesterday that the Securities and Exchange Commission has opened a formal investigation into the timing of company disclosures about problem heart devices and trading in company stock. The company is already under investigation by the FDA and the Justice Department in connection with its handling of product safety issues.
The merger agreement, unless salvaged, would be one of the biggest ever to collapse because an acquiring company maintained that its target's value had fallen materially before the deal closed, the assertion J&J has made and Guidant has rejected, The Times reported.
In a statement, J&J said it planned on fighting Guidant's lawsuit, filed in U.S. District Court in Manhattan.
J&J has taken the position that Guidant's problems have affected its long-term outlook. Guidant has described any affect as short term.