Fitch puts Guidant on evolving watch

Fitch Ratings said it revised Guidant Corp.'s Rating Watch status to evolving from positive.

Guidant's current ratings are A- senior unsecured debt, A- issuer default rating, A- bank credit facility and F2 commercial paper.

The change reflects the uncertainty surrounding whether AAA rated Johnson & Johnson's pending $24 billion acquisition of Guidant will be consummated after J&J announced that it had secured U.S. Federal Trade Commission approval for its acquisition of Guidant, but that product recalls at Guidant and the related regulatory investigations and claims constitute, in J&J's view, a material adverse effect on Guidant, Fitch said.

J&J then stipulated that is not required under the terms of the merger agreement to close the Guidant acquisition and indicated that it cannot assure the transaction will be closed.

Guidant's ratings could still be upgraded should the transaction close, Fitch said. If the transaction should collapse, Fitch said it would need to assess the implications of the product recalls in terms of liabilities and market position along with any potential negative changes in the company's capital structure strategy in assessing the appropriate rating and outlook.

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