Boston Scientific Corporation (NYSE:BSX) Settles Dispute With Johnson & Johnson

Boston Scientific Corporation (NYSE:BSX) announced it will pay Johnson & Johnson $600 million to settle a lawsuit the drug maker filed against Boston Scientific. The lawsuit was over the company’s acquisition of Guidant Corp in 2006. The Payoff finally puts to bed years of litigation in the long standing dispute and brings closure to Boston Scientifics Guidant debacle. The company had paid $27 million to make the acquisition.

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Johnson & Johnson had originally been looking for a settlement of $7 billion but has still agreed to dismiss its lawsuit for the $600 million price tag. Under the agreement J&J will not pursue any further litigation against Boston Scientific Corporation (NYSE:BSX) and in return, Boston Scientific has agreed not to pursue litigation over some scent products. Both sides have confirmed the details of the deal.

Deal Gone Bad

The dispute started when J&J got into a bidding war for Guidant. It sued Boston stating that Boston Scientific Corporation (NYSE:BSX) had interfered with a $24 billion deal that it claims was in place. J&J says the company, along with Abbot, convinced Guidant to back out of the deal. At the time, Guidant had to pay J&J $705 million to exit the agreement. Boston then sold Guidant’s stent and vascular unit to Abbot for $4.1 billion to avoid anti-trust violations. This was also attached to a $900 million loan. Abbot was dismissed from the case by a judge in 2007.

Close Call

Final arguments were made in the case between Boston and J&J but no verdict had been returned. The deal hurt the balance sheet of Boston Scientific for a few years. Demand for Guidant’s products slipped and Boston was preoccupied with the litigation brought on by J&J. The settlement is a relief for Boston Scientific as Boston Scientific Corporation (NYSE:BSX) can now move forward from the mistake and focus on business developments.

Technicals

With the litigation resolved the chart has formed a beautiful cup and handle formation. The renewed focus on Boston Scientific Corporation (NYSE:BSX)’s operations and lifting of the drag put on by the lawsuit could be the catalyst to a move to a higher level.

About the Author

Coper graduated from the University of Chicagi with majors in political science and journalism.

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