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January 23, 2006

Abbott's Partner -- It Ain't Costello
Two weeks ago I wrote about Abbott's historical connection with Boston Scientific. Last week, I called the game-plan to acquire Guidant a "shared Boston-Abbott defensive move to prevent the giant Johnson & Johnson from getting it". This is a theme I've seen since in several articles, one of which from Mark Jewell of the Associated Press quotes an analyst, stating "I don't think [Boston Scientific] could be there at all without what has in effect become, 'The Bank of Abbott.'".

So one has to wonder if history will repeat itself, and if the 2006 Boston Scientific Annual Report will contain a passage similar to this one from 14 years ago in 1992:

"Abbott Laboratories deserves a special note of recognition and gratitude. Our ten-year association was a critical building block in BSC's success. Without it, we could not have become the company we are today. In addition to Abbott's wise counsel, its investment allowed us to keep most of the ownership of BSC in the hands of our people. Today, even after our public offering, the men and women of this company own 75% of its equity."

It is reported that BSC co-founders Pete Nicholas and John Abele alone currently hold 30% of the company's stock.

A few days ago, a reporter asked me if I thought there were still a lot of "personal bonds" between Abbott and Boston Scientific. I'm not sure if corporate entities are wired to experience personal bonds, but as any fan of Battlestar Galactica can tell you, even robots can fall in love.

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A brief note: in my January 10th entry, I referred to the 1983 investment from Abbott as $100 million. My source was an interview with Pete Nicholas published in last month's Directors Monthly. My research has since shown that it was a more modest $21 million, made over four years.

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