Heart device maker Guidant ended a long-running and bitter takeover battle yesterday by agreeing to a $27 billion (€22 billion) takeover by Boston Scientific, leaving rival bidder Johnson & Johnson to seek alternative growth strategies.

J&J, which had been offering to buy Guidant for $71 a share, said in a statement that "it had determined not to increase its last offer for Guidant, because to do so would not have been in the best interest of its shareholders". J&J let a midnight deadline expire without responding to Boston Scientific's $80 per share offer.

The agreement is the latest turn in J&J's 14-month attempt to take control of Guidant, a maker of implantable heart defibrillators and products used in angioplasty that faces a slew of product liability lawsuits related to last year's recall of its defibrillators and pacemakers.

The deal will make Boston Scientific, which generates about 45 per cent of its revenue from its drug-eluting stent system, a one-stop shop for heart doctors seeking a broad product line.

Harris Nesbitt analyst Joanne Wuensch said the combination is a "company-transforming event" for Boston Scientific. "This deal takes them away from being a one-trick pony," said John Farrall, an analyst at National City Private Client Group.

But some worry that Boston Scientific, which is stretching itself by taking on a large amount of debt and a loan from Abbott Laboratories, is paying too much.

J&J, flush with cash, is expected to re-emerge in the medical device arena as a buyer.

As part of the deal, Boston Scientific entered into an agreement with Abbott under which Boston Scientific agreed to divest Guidant's vascular intervention and endovascular businesses, while also agreeing to share rights to Guidant's drug-eluting stent program.

All four companies have significant operations in Ireland.

Abbott Laboratories yesterday reported a slight rise in fourth-quarter profit as higher sales of prescription drugs and medical products outweighed the cost of repatriating foreign earnings.

Earnings matched analyst expectations at $976.4 million (63 US cents a share) after exceptionals against $974.6 million (62 cents a share). Revenue fell slightly below Street expectations, but investors were more focused on how Abbott would benefit from the Boston Scientific /Guidant deal. - (Reuters)