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IT TAKES COLLABORATION TO MAKE SCIENCE MORE MEANINGFUL

  • Guidant Press Releases

    Feb 2, 1999
    Guidant Corporation Completes Purchase of Sulzer Medica's Electrophysiology Business, Announces Related Product and Manufacturing Strategy

    Indianapolis, IN - Guidant Corporation (NYSE and PCX: GDT), a global leader in cardiovascular therapy, announced late yesterday that it had completed its acquisition of Sulzer Medica''s electrophysiology business, including its intellectual property and distribution contracts. Originally announced on September 21, 1998, the final purchase price, including related fees, is approximately $810 million cash, subject to final adjustments, and will be accounted for as a purchase transaction.

    As previously announced, the final purchase price was based on the aggregate sales volume produced by the U.S. representatives of the electrophysiology business who agreed to become Guidant employees prior to closing. A minimum 50 percent conversion level was required, and as of late January, approximately 70 percent had been converted. While there is still an opportunity for Intermedics sales representatives to become Guidant employees, their contracts will be honored. The acquisition will be financed through a combination of commercial paper and the issuance of long-term debt securities, and will result in a one-time, pre-tax charge of approximately $49 million in the first quarter of 1999, representing the value ascribed to in-process technology. Guidant had previously charged its third quarter in 1998 with $200 million of the purchase price ascribed to settlement of intellectual property litigation.

    James M. Cornelius, Chairman of the Guidant Board of Directors, stated, "This acquisition positions Guidant to become the number-two player in pacemaker revenues and enhances our distribution capabilities in implantable defibrillators. Given our expectations regarding growth in the Cardiac Rhythm Management business, coupled with our current and projected technology portfolio, we can now leverage our global distribution strength to enhance our ability to offer world-class products and services."

    Ronald W. Dollens, Guidant President and Chief Executive Officer, said, "In evaluating our Cardiac Rhythm Management business, we realized that in order to maintain the growth rates and profitability required for success, we needed to enhance our distribution capabilities and look for additional operating efficiencies. Our acquisition of Sulzer Medica''s electrophysiology business fulfilled both strategic challenges."

    In addressing employees at the newly acquired facility in Angleton, Texas, Jay Graf, President of Guidant''s CRM business group, outlined product and manufacturing plans for the combined operations. "Long-term, our intention is to source all products from existing Guidant facilities in Minnesota, Ireland, and Puerto Rico. That is, we intend to close the acquired facilities in Angleton and in LeLocle, Switzerland following a transition period of approximately 12 months. In the interim, we will need to continue to manufacture products in Angleton and LeLocle." Graf added that with the exception of ThinLine leads acquired in this transition, Guidant''s long-term CRM product strategy will most likely be focused on existing Guidant product and product in the Guidant pipeline. An assessment of Intermedics technology will be made to determine what additional technologies will be incorporated into future products. However, the Intermedics brand name will continue and all existing Intermedics contracts will be honored.

    "We understand the impact these decisions have on the employees in Texas and Switzerland, and have put together generous severance and transition packages to help them through this process," Graf said. "We also understand that in order to remain competitive, and meet our objective of making this transaction non-dilutive to 1999 annual earnings, decisions regarding facility consolidations had to be made," Graf said. "However, these decisions will not affect the support that physicians and patients will receive in terms of implant support, patient follow-up, and warranty administration."

    Guidant also announced that discussions are underway with parties interested in the purchase of Osypka and Oscor, which were parts of Sulzer''s electrophysiology business. The products made by Osypka and Oscor are not part of Guidant''s long-term CRM strategy.

    A global leader in the medical device industry, Guidant Corporation provides innovative, minimally invasive and cost-effective products and services for the treatment of cardiovascular and vascular disease. For more information on Guidant''s products and services, visit the company''s Web site at http://www.guidant.com.