Guidant, the embattled medical device maker, said Monday that it was suing its reluctant acquirer Johnson & Johnson, signaling that negotiations between the companies had reached an impasse and had moved into a more confrontational phase.



The lawsuit, filed in U.S. District Court in New York City, asked the court to force Johnson & Johnson to complete the deal. It came as Guidant disclosed a raft of new U.S. government and state investigations into how it handled the disclosure of problems with its implantable heart defibrillators. The company said it was the subject of a U.S. Securities and Exchange Commission inquiry and had received “civil investigative demands” from a consortium of 34 states and the District of Columbia.



Guidant, based in Indianapolis, also reported Monday that its profit fell 57 percent in the third quarter from a year earlier, to $65.4 million, as recalls of its products mounted. Revenue fell 14 percent to $795 million.



Shares of Guidant were down $2.11, or 3.6 percent, at $56.81, in afternoon trading Monday on the New York Stock Exchange, where Johnson & Johnson was down 18 cents at $60.70.



International Herald Tribune





Some industry analysts said they believed that a new deal could still be struck at a lower price. But people involved in the negotiations from both companies said that they remained at an impasse over price and that both sides were unwilling to budge.



Guidant, which is based in Indianapolis, also disclosed yesterday that the Securities and Exchange Commission had opened a formal investigation into the timing of company disclosures about problem heart devices and trading in company stock. A consortium of state attorneys general has requested Guidant records, as well, to determine if it might have violated state laws in connection with device sales, Guidant said.



New York Times







U.S. stocks were little changed on Monday, as oil prices fell, sending energy shares down, and drug maker Johnson & Johnson was sued by medical-device maker Guidant Corp. to force completion of a $25 billion merger of the two companies.



Shares of J&J led decliners on the blue-chip Dow after news of the lawsuit brought by Guidant. J&J shares fell 0.6 percent to $60.53 and shares of Guidant slid 4.1 percent to $56.46.



“The J&J and Guidant dispute may be weighing on sentiment — there’s some question about the legal dispute and that’s probably had an impact on the tone of the market,” said Evan Olsen, head of equity trading at Stephens Inc.



The Dow Jones industrial average was down 2.01 points, or 0.02 percent, at 10,528.60. The Standard & Poor’s 500 Index was down 1.39 points, or 0.11 percent, at 1,218.77. The technology-laced Nasdaq was down 1.09 points, or 0.05 percent, at 2,168.33.



Reuters