RADNOR, Pa., Nov. 8 /PRNewswire/ -- The following statement was issued today by the law firm of Schiffrin & Barroway, LLP:
Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Southern District of New York on behalf of purchasers of the publicly traded securities of Guidant Corporation (“Guidant” or the “Company”) between December 15, 2004 and November 4, 2005, inclusive (the “Class Period”).
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Schiffrin & Barroway, LLP (Darren J. Check, Esq. or Richard A. Maniskas, Esq.) toll-free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at info@sbclasslaw.com.
The complaint charges Guidant and certain of its officers and directors with violations of the Securities Exchange Act of 1934. On December 15, 2004, Guidant, who describes itself as a company that “pioneers lifesaving technology,” entered into a $25.4 billion merger deal with Johnson & Johnson (referred to as the “Guidant/Johnson & Johnson merger”), which was to close on November 4, 2005. On news of this, shares of Guidant rose to $72.05 per share. While the Company pointed to its defibrillator business as a key component of that deal, the Complaint alleges it concealed from Johnson & Johnson and investors significant unaddressed product defect and liability issues of the Company’s implantable defibrillator product lines. More specifically, defendants knew or recklessly disregarded: (1) that as early as 2002, Guidant’s defibrillator products were defective and caused harm to patients; (2) that this fact was concealed in order for Guidant to maintain the revenue stream it received from its lucrative defibrillator products and make itself a more attractive merger candidate; and (3) that once Guidant forged a deal with Johnson & Johnson, defendants continued to conceal from its shareholders and public that its defibrillator products were defective because such information caused an overwhelming threat to the Guidant/Johnson & Johnson merger.
About 6 months after the Guidant/Johnson & Johnson merger was announced, Guidant’s scheme began to unravel. On June 14, 2005, The New York Times published an article with the headline “Implants With Flaws: Disclosure And Delay.” Therein, reporter Barry Meier wrote that Guidant discovered the design flaw in early 2002 and did not inform doctors. Thereafter, on June 17, 2005, the FDA issued a nationwide recall notification, impacting Guidant’s implantable defibrillators and cardiac resynchronization therapy defibrillators. Within that notification, the Food and Drug Administration (“FDA”) advised the public that the malfunction of Guidant’s devices could lead to a serious, life-threatening event for a patient. By June 20, 2005, shares of Guidant fell $3.36 per share, or 4.23 percent, to close at $70.33 per share on heavy trading volume.
On June 24, 2005, Guidant announced that it was voluntarily advising physicians about important safety information regarding certain devices. Guidant apprised the FDA of this action, and the FDA may classify this action as a recall. At this time, Guidant was in the very early stages of a diligent evaluation of the component failure. Moreover, the Company stated that as a precautionary measure, physicians should discontinue implants of these devices pending further notice. On news of this, shares of Guidant fell $4.70 per share, or 6.85 percent, to close at $63.90 per share on unusually heavy volume.
Then, on October 18, 2005, prior to the opening of the market, Johnson & Johnson’s vice chairman, Robert J. Darretta Jr., on a conference call with investors, stated that the company was reviewing its options under the terms of the Guidant/Johnson & Johnson merger. Specifically, Mr. Darretta stated: “We are continuing to closely monitor the situation at Guidant[.] In light of these matters and their impact, we are continuing to consider the alternatives under our merger agreement.” On news of this, shares of Guidant, on October 18, 2005, shed $8.28 per share, or 11.64 percent, to close at $64.10 per share on heavy trading volume.
Following news that the Guidant/Johnson & Johnson merger may not be completed, Guidant and its shareholders received more bad news when Guidant announced, on October 25, 2005, that it had received administrative subpoenas from the United States Department of Justice U. S. Attorney’s offices in Boston and Minneapolis issued under the Health Insurance Portability & Accountability Act of 1996. The subpoena from the U.S. Attorney’s office in Boston requested documents concerning pacemakers, ICDs, leads and related products. The subpoena from the U.S. Attorney’s office in Minneapolis requested documents relating to Guidant’s VENTAK PRIZM(R) 2 and CONTAK RENEWAL(R) 1 and 2 devices. Following this news, shares of Guidant fell $2.25 per share, or 3.48 percent, on October 26, 2005, to close at $62.45 per share, on heavy trading volume.
On November 2, 2005, Guidant and its shareholders received some good news when it was announced that the Federal Trade Commission cleared the Guidant/Johnson & Johnson merger. The good news, however, was short-lived. On November 2, 2005, Johnson & Johnson warned that it might pull out of a $25.4 billion deal to buy Guidant because of potential liability arising from the medical device maker’s sweeping product recalls and a regulatory investigation. Moreover, Johnson & Johnson stated that it was not required to close the acquisition. Furthermore, Johnson & Johnson stated the following: “Johnson & Johnson cannot assure that the companies will resume those discussions or, if discussions do resume, whether they will be able to reach agreement on revised terms that would allow Johnson & Johnson to proceed with the transaction.” News of this sent shares of Guidant spiraling downward. Guidant’s shares fell $2.70 per share, or 4.28 percent, to close at $60.40 per share on November 2, 2005.
On November 3, 2005, Guidant was accused by New York Attorney General Eliot Spitzer of misleading doctors about a design flaw in a heart device. The complaint contends that Guidant, the second-biggest maker of implantable defibrillators, failed to inform doctors that its VENTAK PRIZM(R) 2 DR Model 1861 defibrillator could malfunction with potentially fatal consequences. On November 3, 2005, shares of Guidant fell $2.83 per share to close at $57.57 per share.
Then, Johnson & Johnson missed the November 4, 2005 deadline for completing the Guidant/Johnson & Johnson merger. Following this on November 7, 2005, Guidant announced that it had commenced a lawsuit against Johnson & Johnson, seeking to force the health care company to complete a $25.4 billion acquisition of Guidant. Moreover, Guidant disclosed in its Form 10-Q that the United States Securities and Exchange Commission (“SEC”) had begun a formal inquiry into some of its product disclosures and trading in Guidant stock.
Following this series of announcements, Johnson & Johnson, on November 7, 2005, issued a response to the Guidant lawsuit. More specifically, Johnson & Johnson stated it still believed that it was not required to complete its acquisition of Guidant. Johnson & Johnson further stated that it viewed Guidant’s product recalls and related regulatory investigations as serious matters and believed they have had a “material adverse effect” on Guidant. On this news, shares of Guidant plunged even further on November 7, 2005. Shares of Guidant fell $1.40 per share, to close at $57.52 per share on heavy trading volume.
Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin & Barroway, which prosecutes class actions in both state and federal courts throughout the country. Schiffrin & Barroway is a driving force behind corporate governance reform, and has recovered billions of dollars on behalf of institutional and individual investors from the United States and around the world. For more information about Schiffrin & Barroway, or to sign up to participate in this action online, please visit http://www.sbclasslaw.com.
If you are a member of the class described above, you may, not later than January 3, 2006 move the Court to serve as lead plaintiff of the class, if you so choose. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as “lead plaintiff.” Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Schiffrin & Barroway, or other counsel of your choice, to serve as your counsel in this action.
CONTACT: Schiffrin & Barroway, LLP Darren J. Check, Esq. Richard A. Maniskas, Esq. 280 King of Prussia Road Radnor, PA 19087 1-888-299-7706 (toll-free) or 1-610-667-7706 Or by e-mail at info@sbclasslaw.com
Schiffrin & Barroway, LLP
CONTACT: Darren J. Check, Esq. or Richard A. Maniskas, Esq., both ofSchiffrin & Barroway, LLP, +1-888-299-7706 or +1-610-667-7706,info@sbclasslaw.com
Web site: http://www.sbclasslaw.com/
