Johnson & Johnson's $7.2 billion claim against Boston Scientific now with U.S. judge

Wed Jan 21, 2015 7:39pm EST
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By Joseph Ax

NEW YORK (Reuters) - For more than eight years, Johnson & Johnson (JNJ.N: Quote) has pursued billions of dollars in damages against Boston Scientific Corp (BSX.N: Quote) after the latter won a controversial – and ultimately ill-fated – bidding war for device maker Guidant.

Now the dispute lies in the hands of a federal judge after lawyers for both companies made final presentations on Wednesday at the close of a non-jury trial in New York federal court.

J&J is seeking more than $7.2 billion in damages and interest from Boston Scientific as Guidant’s successor, an amount that one analyst has characterized as a “major near-term risk” for a company with a market capitalization of about $19 billion as of Wednesday.

U.S. District Judge Richard Sullivan, who oversaw the trial, did not indicate when he would rule.

The dispute stems from 2005, when J&J agreed to buy Guidant for $21.5 billion. Under the deal, Guidant was permitted to consider unsolicited competing bids.

In late 2005, Boston Scientific announced its intention to make an offer, which was contingent on selling some of Guidant’s assets to Abbott Laboratories (ABT.N: Quote) to satisfy antitrust concerns.

J&J claims Guidant knowingly violated their contract by providing due diligence directly to Abbott. Without that breach, J&J argues, Abbott would have walked away from the deal, scuttling Boston Scientific's bid and leaving Guidant with no competing offers.

“What made the breach material was that Boston Scientific was not going to make an offer if Abbott was not involved,” said Harold Weinberger, a lawyer for J&J.   Continued...

Products made by Johnson & Johnson for sale on a store shelf in Westminster, Colorado April 14, 2009. REUTERS/Rick Wilking