Health-care products giant Johnson & Johnson's $25. 4 billion acquisition of Guidant could face tough review from regulators because of their competition in the coronary stent...

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INDIANAPOLIS — Health-care products giant Johnson & Johnson’s $25.4 billion acquisition of Guidant could face tough review from regulators because of their competition in the coronary stent market, analysts say.

Executives of Johnson & Johnson and Guidant, however, said yesterday they did not expect federal regulators to raise any objections that would scuttle the deal.

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Guidant, a spinoff by Eli Lilly in 1994, capitalized on breakthroughs in heart stents, tiny devices that keep arteries propped open, and pacemaker-defibrillator technology to become one of the world’s top medical-device makers.

That pacemaker-defibrillator business was clearly desired by Johnson & Johnson executives, as it would give the company a strong position in the field.

“Guidant strengthens our position in cardiovascular care, one of the most important and fastest growing portions in health care,” said William Weldon, Johnson & Johnson’s chairman and chief executive officer.

The companies’ stent operations, however, could receive scrutiny from the Federal Trade Commission (FTC).

Johnson & Johnson subsidiary Cordis and Boston Scientific are the only two companies with drug-coated stents on the market. Guidant has been a market leader in bare-metal stents, but its project to introduce its own drug-coated model has run into delays and the company has not put its product on the U.S. market.

FTC regulators will consider how the merger would affect the drug-coated stent market, as Guidant’s stent could be approved by the Food and Drug Administration (FDA) by early 2006, said Robert Doyle, a Washington antitrust attorney who is a former FTC administrator.

“You’ve got a Guidant product, for all intents and purposes, that is already in the market in terms of providing some competitive constraint over the Johnson & Johnson product,” Doyle said. “The FTC will look at this, and the FTC is always interested in knowing when FDA pipeline products will be provided to the marketplace.”

Ronald Dollens, who will remain president and CEO of Guidant until the transaction has closed, said while J&J and Boston Scientific are the only companies now approved to sell drug-coated stents, Guidant and two other companies — Abbott Laboratories and Medtronic — were poised to enter the market.

“If the market is going from five competitors to four, then generally the regulatory bodies consider that as sufficiently competitive and do not require any major divestiture,” he said.

Guidant shareholders and overseas regulators also still must approve the acquisition, which New Brunswick, N.J.-based Johnson & Johnson said was the largest business deal in its 118-year history. The companies said they expected the deal to close during the third quarter of 2005.

Under terms of the deal, each Guidant share will be exchanged for $30.40 in cash and $45.60 in Johnson & Johnson stock.

The $76 price is a 5.5 percent premium over Guidant’s stock price yesterday of $71.70, down 35 cents. Guidant shares were trading for about $50 in July.

Shares of Johnson & Johnson reached a 52-week high yesterday, rising $2.55 to $63.45.