Wednesday, January 18, 2006

“Vince, It Looks Like Jim and Larry are Going All In! Incredible!”

Mr. Tobin suggested a dramatic new offer at $78 a share -- then headed out to a Rolling Stones concert… —Wall Street Journal

Thus the CEO of Boston Scientific raises the price of his company’s bid for Guidant by $1.5 billion, and then goes out to see Mick and Keith play “Satisfaction” for the zillionth time.

But wait—Boston Scientific’s CFO had an even better idea! Read on!

Over the weekend, Chief Financial Officer Larry Best suggested an even bolder bid of $80 a share…

And so it was that Boston Scientific, which had just weeks before, metaphorically speaking, emerged from the crowd, bellied up to the poker table opposite J&J, and audaciously starting bidding for the Guidant pot, went “all-in” with an $80 a share bid for Guidant, as described in today’s Wall Street Journal.

That kind of mano-a-mano bid-hiking might make great ratings for Mike and Vince covering a match at the Mohegan Sun casino, but it is not necessarily the way to spend $27 billion on a company that needs serious attention to recover its leadership in a notoriously complex business.

I have no idea who’s going to “win” the bidding war for Guidant, and I have no idea if in the long run the “winner’s” shareholders will come to celebrate or regret this kind of testosterone-charged deal-making.

But the last headline-splashing, high-stakes takeover-poker-match I recall was RJR. And after the initial thrill of walking away from the table with all the chips, KKR spent years living it down.

Jeff Matthews
I Am Not Making This Up

© 2005 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations.


cdub said...

Makes you wonder how weak BSX's underlying business really is. I smell desperation, and that can't be good.

idlewild said...

Didn't Bruce Wasserstein get Robert Campeau to jack up the price for Federated by telling him to "be a man"? And a year later he was in bankruptcy.

tahoe kid said...

Someone once said, "Most mega-mergers are born out of weakness-not strength." This BSX/GDT/JNJ deal seems to be a good example.

mehoffer said...

was reading some old posts, but you might wantto 2x check KKR results w/ RJR.. They made out well for themselves and it catapulted them to even greater subsequent