Ironically, Johnson & Johnson ($JNJ) is suing Boston Scientific ($BSX) for $4 billion for preventing it from acquiring ill-fated stentmaker Guidant, thereby sparing the plaintiff from the $6 billion-plus in write-offs that Boston Scientific has incurred in the years following its 2006 acquisition.
The bizarre suit is set to go trial on Nov. 20 in a Manhattan federal court. Analysts are perplexed that Johnson & Johnson isn't simply counting its blessings.
"To see that you've got J&J, who should be thanking Boston Scientific for preventing them from doing that deal and saving J&J from massive losses, is now trying to have its cake and eat it too? It's over the top," Steve Kozachok, a healthcare merger lawyer at Briggs & Morgan, told the Minneapolis StarTribune. "I think somebody very high up at each of the companies really doesn't like the other person, and it's more of a personality spat than anything else."
The suit centers on the role played by Abbott Labs ($ABT), which allowed Boston Scientific to steal Guidant from Johnson & Johnson at the last second. By promising to buy some of Guidant's product lines from Boston Scientific upon the closure of the deal, Abbott freed Boston of antitrust concerns, enabling it to complete the disastrous $27 billion acquisition.
J&J says Guidant violated its confidentiality agreement when the then-"hot" company allowed Abbott to inspect its business in order to make the side deal with Boston Scientific, which oddly enough, was similar to the arrangement Abbott had previously made with J&J, according to the StarTribune.
In court, J&J will have to prove that Guidant's violation was willful and financially damaging, according to attorneys in the StarTribune article. Already traumatized by the injuries suffered from Guidant's subsequent implosion following the Boston acquisition, investors in Guidant's owner are nervous about the deal once again.
"They're clearly gearing up for trial," litigator Bret Puls told the StarTribune. "That said, with claims of this size and cases of this size, the majority of them settle, even if it's on the courthouse steps."
- read the Star Tribune article