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January 10, 2006

There's Some History There
Over the weekend, Abbott signed an agreement with Boston Scientific to buy Guidant's vascular intervention and endovascular businesses, if Boston successfully concludes its acquisition bid for Guidant.

But when Boston Scientific founders Pete Nicholas and John Abele were struggling back in 1983 to make their company into a significant player in the medical device field, Abbott invested $100 million (that's million, not billion) with them -- in 1983 that constituted 20% ownership of Boston Scientific and the investment allowed Nicolas and Abele to grow their company until they took it public in 1992. At that time Abbott, unsure of the future of medical devices vis-a-vis the healthcare reforms being discussed in the Clinton years, decided to cash in its investment, then worth $340 million (not billion).

Now, a decade-and-a-half later, Abbott will pay Boston $4.3 billion (that's billion, not million) for the Guidant division and a 50/50 partnership in the everolimus drug-eluting coronary stent. Abbott will also give Boston a $750 million loan. Why the loan? As Boston said in its conference call yesterday, "Why not?"

I think it's just for old friendship's sake....

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