(Adds comments from J&J and Boston Scientific, background)
By Brendan Pierson
Feb 17 (Reuters) - Medical device maker Boston Scientific Corp on Tuesday said it has agreed to pay $600 million to Johnson & Johnson to settle a long-running lawsuit over Boston Scientific's 2005 acquisition of rival Guidant.
J&J had sought more than $7 billion in damages after it lost a bidding war to Boston Scientific following an initial deal to buy Guidant for $21.5 billion in 2005. J&J accused Guidant of breaking that deal.
Boston Scientific, which admitted no liability by Guidant under the settlement, said it expects to record a pre-tax litigation-related charge of about $600 million in its fourth quarter 2014 results. J&J will permanently drop its lawsuit.
J&J spokesman Ernie Knewitz said in a statement that the settlement "reflects how important it is for parties involved in merger agreements to fully live up to their obligations."
Boston Scientific general counsel Tim Pratt said in a statement that the settlement was in the best interest of the company and its shareholders.
The settlement came just a month after attorneys for the two companies wrapped up a non-jury trial in Manhattan federal court. U.S. District Judge Richard Sullivan, who oversaw the trial, did not rule.
Under the 2005 merger deal at the heart of the dispute, Guidant was allowed to consider competing bids alongside J&J's, but not solicit them.
In late 2005, Boston Scientific announced that it planned to make an offer, which was contingent on selling some of Guidant's assets to Abbott Laboratories to deal with antitrust concerns. J&J claimed in its lawsuit that Guidant violated the merger agreement by providing due diligence directly to Abbott, making Boston Scientific's offer possible.
Boston Scientific eventually acquired Guidant for $27 billion and paid J&J a $705 million termination fee.
The deal, which left Boston Scientific laden with debt and dealing with a host of Guidant product recalls, was widely considered to be a disaster for Boston Scientific. At trial, Boston Scientific argued that J&J should not get any damages because it was better off for losing the bidding war.
The case is Johnson & Johnson v. Guidant Corporation, U.S. District Court for the Southern District of New York, No. 06-7685. (Reporting by Brendan Pierson and Bill Berkrot; Editing by Grant McCool and Phil Berlowitz)