1. What were the key differences between the two firms’ bidding strategies? Be specific.
2. What might J&J have done differently to avoid igniting a bidding war?
3. What evidence is given that J&J may not have seen Boston Scientific as a serious bidder?
4. Explain how differing assumptions about market growth, potential synergies, and the size of the potential liability related to product recalls affected the bidding.

Johnson & Johnson, the behemoth American pharmaceutical company, announced an agreement in December 2004 to acquire Guidant for $76 per share for a combination of cash and stock. Guidant is a leading manufacturer of implantable heart defibrillators and other products used in angioplasty procedures. The defibrillator market has been growing at 20% annually, and J&J desired to reenergize its slowing growth rate by diversifying into this rapidly growing market. Soon after the agreement was signed, Guidant’s defibrillators became embroiled in a regulatory scandal over failure to inform doctors about rare malfunctions. Guidant suffered a serious erosion of market share when it recalled five models of its defibrillators.