S&P puts Guidant on developing watch

Standard & Poor's said it revised the CreditWatch implications on its Guidant Corp. ratings to developing from positive. Ratings affected include the A-/A-2 corporate credit ratings, A- unsecured bank loan rating, A- senior unsecured debt rating and A-2 commercial paper rating.

Guidant is currently the object of competing acquisition bids from Johnson & Johnson (AAA/stable/A-1+) and Boston Scientific Corp. (A/negative watch/A-1).

The CreditWatch action reflects Guidant's lower-than-expected fourth-quarter earnings and a more uncertain time frame to recover market share given recalls of its implantable cardioverter defibrillators, the agency said. As a result, Boston Scientific has revised its financial expectations of the combined company downward.

S&P said pro forma cash generation and net debt over the next several years will be weaker than indicated on Dec. 5, when Boston Scientific made its initial acquisition proposal, but the acquisition price ($25 billion in cash and stock) and financing plans are relatively unchanged.

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