Abbott to win big if Boston buys Guidant: analysts

CHICAGO (Reuters) - If Boston Scientific Corp. <BSX.N> winds up winning the bidding war over heart device maker Guidant Corp.<GDT.N>, drug and medical device maker Abbott Laboratories Inc.<ABT.N> may walk away as the biggest winner, analysts said on Monday.

Abbott, which has set out to build a medical device division through smaller acquisitions and internal growth, would get a major jump-start if Boston Scientific Corp.<BSX.N> succeeds in its bid to woo Guidant from its pending marriage with Johnson & Johnson<JNJ.N>.

On Sunday Abbott said it cut a $3.8 billion deal with Boston Scientific to buy Guidant's vascular business, contingent on Boston Scientific succeeding in its $25 billion bid for Guidant.

For Abbott, the deal would be the company's second-largest, behind its $6.9 billion acquisition of Knoll Pharmaceuticals, a deal that brought with it Humira, Abbott's blockbuster rheumatoid arthritis drug.

Abbott's shares rose $1.45, or 3.55 percent, to $42.34 in Monday afternoon trade on the New York Stock Exchange.

A Guidant deal would help Abbott with its plan to bolster its medical device holdings, providing a buffer from the volatile pharmaceutical market.

Morgan Stanley analyst Glenn Reicin said in a research note Abbott looks to have benefited from the Guidant bidding war.

"The deal, if successful, should secure 10 percent earnings growth for Abbott for the next four years," said Reicin, whose firm is advising Guidant on the J&J deal.

JP Morgan analyst Michael Weinstein on Monday raised its rating on Abbott on the assumption that Boston Scientific would ultimately prevail, securing double-digit earnings growth for Abbott in 2007 through 2009. That's up from the low-double- digit 2007 earnings growth Abbott projected last month.

"Abbott, in our view, is the big winner should the proposed Boston Scientific transaction to through," Weinstein wrote.

Boston Scientific's offer for Guidant represents a 12 percent premium over J&J's latest offer, and shareholders so far find the deal appetizing.

"They've got the financing. They will get the deal done," Miller Tabak & Co. health care strategist Les Funtleyder said of Boston Scientific.

Moody's Investors Service and Standard & Poor's both signaled support for Abbott's intention to buy Guidant's vascular business, with both affirming Abbott's ratings.

Should Boston Scientific fail, however, Abbott would fall back on an existing deal it cut with J&J to license a popular stent delivery system known as rapid exchange, a technology that analysts said would give Abbott an edge over larger medical device player Medtronic Inc.<MDT.N>

The licensing provision was a condition set by the U.S. Federal Trade Commission for approving the J&J/Guidant deal. The technology is used to place cardiac stents in the body.

"Regardless of which company acquires Guidant, Abbott will do well. In either case, it will enhance our medical devices business," Abbott spokesman Jonathon Hamilton told Reuters.

(Additional reporting by Susan Kelly in Chicago)