A Medical Device Daily
Federal regulators have asked for more information regarding Johnson & Johnson's (J&J; New Brunswick, New Jersey) planned $25.4 billion acquisition of Guidant (Indianapolis) as well as Gambro's (Stockholm, Sweden) planned divestiture of a U.S. unit to DaVita (Torrance, California).
J&J and Guidant said they had anticipated the request and that they still expect the Federal Trade Commission (FTC) to approve the deal in time for it to be finalized by the end of October.
When the transaction initially was disclosed in December (Medical Device Daily, Dec. 17, 2004), analysts said they expected a tough review from regulators because Guidant and J&J subsidiary Cordis (Miami Lakes, Florida) are among the few companies that make coronary stents.
No details about the information sought by the regulators was released.
Guidant, which was spun off from Eli Lilly and Co. (also Indianapolis) in 1994, also makes heart pacemakers and defibrillators.
Johnson & Johnson is to pay $76 in cash and stock for each share of Guidant,
In other J&J news, the company said in a filing with the Securities and Exchange Commission that it has bumped up the salary and bonus compensation of CEO William Weldon by 28% to $4.1 million. Weldon will receive a $1.6 million base salary, along with a $2.5 million bonus based on his performance during 2004, the company said.
In 2003, he was paid $3.2 million in salary and bonus, according to the company's proxy filing.
Weldon also was awarded 410,000 stock options, with an exercise price of $66.18. The options became exercisable on Feb. 15. The chief executive received 325,000 stock options in 2003, with an exercise price of $53.93.
On Feb. 14, under the company's long-term incentive plan, Weldon received 100,000 “certificate of extra compensation“ units for his 2004 performance. The value of the units are subject to the performance of the company, Johnson & Johnson said in the filing.
The new base salary is effective Feb. 28.
In the other piece of U.S. regulatory news, Gambro said late last week that it received a second request from the FTC for additional information and documentary material in connection with its pending divestiture of Gambro Healthcare U.S. (Nashville, Tennessee) to DaVita.
If realized, the $3.05 billion (SEK 20.5 billion) cash divestment, first disclosed in December (Medical Device Daily, Dec. 8, 2004) will give Gambro a pre-tax capital gain of $1.2 billion (SEK 8.1 billion) and net debt will be turned into a cash surplus of about $2 billion (SEK 13.2 billion). Gambro said the capital gain would be recognized at deal closing.
While divesting the U.S. dialysis unit, Gambro entered into a supplier and research partnership with DaVita. Gambro will be the preferred supplier of renal products to DaVita for at least 10 years, and it also will work with DaVita in both dialysis product R&D and quality of care.
Gambro said it intends to respond promptly to the FTC request. The effect of the second request is to extend the waiting period imposed by the Hart-Scott-Rodino Antitrust Improvements Act until 30 days after DaVita and Gambro have substantially complied with the request, unless terminated.
Gambro is a global medical technology and healthcare company with leading positions in renal care services and products and blood component technology.
After the divestment, Gambro will consist of the three business areas: Gambro Renal Products, Gambro Blood Component Technology (BCT) and Gambro Healthcare (non-U.S. clinics).
With the acquisition, DaVita will add about 565 dialysis centers to its operations, currently representing about 43,200 patients. With the deal closing, DaVita will serve about 96,000 patients at more than 1,200 clinics in 41 states and the District of Columbia.
In other dealmaking news:
• Neuromodulation Systems (Plano, Texas) reported that it sold off the last of its 3.5 million shares of former merger target Cyberonics (Houston) as the company prepares to move into new clinical trials this year.
The maker of neurostimulation devices said it made a pretax profit of about $85.2 million on the sale of its total holdings in Cyberonics.
The company bought a 14.9% stake in Cyberonics in August for $14.29 a share and expressed an interest in combining the two companies. Cyberonics publicly rebuffed the offer in September.
• Eye care services provider TLC Vision (Mississauga, Ontario) said that its Midwest Surgical Services (MSS; St. Louis) subsidiary acquired the assets of Minnesota-based Mobile Diagnostics (MDI).
MDI provides mobile glaucoma scanning services to optometrists and ophthalmologists. Glaucoma is a group of eye diseases that can gradually cause loss of sight without warning and often without symptoms if not detected in time. It affects more than 3 million Americans.
MDI's services provide early detection and management of glaucoma. The GDx VCC exams provide the earliest possible detection of glaucoma by measuring the health of the retinal nerve layer. The Ocular Blood Flow Analyzer records ocular blood flow data, providing information about the vascular network of the eye.
“This acquisition is consistent with our strategy to diversify our eye care services business,“ said Jim Wachtman, president and CEO. “Glaucoma diagnostic capability broadens our offering and allows us to expand and further leverage our current doctor relationships.“
MSS is considered to be the largest cataract outsource service provider in the U.S.