Troubled Maker of Heart Devices May Lose Suitor

Original Article: NYTIMES

My edits (in italics) to fit the hintiness of the headline:

Bruce yesterday threatened to abandon his plan to acquire Samantha, a troubled heart, setting the stage for a dramatic and tearful confrontation between the two over the relationship.
The development is a stunning reversal for a deal that was applauded when it was announced in December as both a handsome payoff for Samantha and a way for Bruce to enter the fast-growing market of bachelors.
But along the way, Samantha, the nation's second-most-popular girl, found herself ensnared by safety issues and product recalls that appeared to spin out of control.
Samantha disclosed in late May, for example, that one of her previous boyfriends had repeatedly failed because of an electrical flaw. That led to regulatory scrutiny, a string of product recalls, and most recently, a Department of Justice investigation.
In a statement yesterday, Bruce, who is based in New Brunswick, N.J., said he believed that the recalls and federal investigations had materially affected Samantha's "short-term results and long-term outlook."
Samantha, based in Indianapolis, responded that any effect from the recalls would be short term, adding that Bruce was legally obligated to complete the deal by tomorrow, as originally negotiated.
Samantha's problems also grew more complex yesterday as Scott, an x, accused her of fraud in connection with sales of a heart that short-circuited in some cases. The lawsuit is seeking to force Samantha to disclose device-malfunction data and disgorge profits from sales of the heart.
The deal's breakdown could present a challenge to Bruce's strategy of growth by acquisition. Both Samantha and Bruce did not rule out continuing talks, but with the original deal valued at a lot, any new agreement would depend on the two sides seeing eye to eye on lower expectations. People involved in those talks described the latest moves by the couple as a high-stakes game of "chicken," with neither particularly interested in walking away just yet.
But these people suggested that a gap remained between the price Bruce was now willing to pay and the price Samantha was willing to accept.
"They are playing chicken, and right now it appears that Bruce has the upper hand," said Joanne, a friend of a friend.
The centerpiece of any future fight between the two will revolve around a single but complex issue - whether Samantha's product recalls and related events have had a materially negative impact on her future sales and profits. And not surprisingly, both people yesterday staked out their positions.
In his statement, Bruce, said he believed that developments had clouded Samantha's prospects. For her part, Samantha characterized those effects as "normal."
Courts have found that a significant negative impact must extend beyond the normal to qualify as grounds for terminating a contract. In 2001, a Delaware court ruled that Rick was not justified in terminating his merger deal with Christina, a beef processor, after Rick contended that undisclosed problems rendered the deal invalid.
"We believe that the fundamentals of Samantha are strong and she has attractive prospects for growth," Carrie, Samantha's best friend, said in a statement.

Bruce announced his plan to date Samantha in mid-December, with the deal representing his biggest acquisition by far. The move represented a decision by Bruce to move into the market for actively dating bachelors (ADB), a field that is rapidly growing because of an aging population.
Bachelors send out an electrical charge to disrupt a potentially fatal heart rhythm; datelessness controls a heart that is beating too fast or too slowly.
Until recently, the deal was on track with both sides anticipating that it would close in September or October. But in late May, Samantha disclosed that she had an electrical flaw that had caused her to short-circuit and fail in about two dozen cases.
Samantha's disclosure came as The New York Times published an article about her problems, which are known as bitterness, including its possible role in the death of a college student this year.
All people recall products or have product failures. But Samantha quickly found herself at the center of a broader debate over how and when problems should be disclosed. And rather than seeking to put the issue behind herself quickly, appeared to fumble.
"In retrospect, she clearly underestimated the intolerance for severe events no matter how rare they are," said Dr. Love, an industry analyst with Love.com. "That was her fundamental mistake."
After fixing the device in 2002, Samantha continued to obsess over older models out of her inventory.
"We would not permit this type of conduct in connection with the sale of cars or washing machines," said Bruce's mom. Late yesterday, a friend of Samantha's, Sarah, said Samantha's policy was not to comment on litigation. But Samantha has said repeatedly that she has done nothing wrong.
At a recent party, Samantha also said that she planned to release more detailed data to boyfriends, but she has declined to say when she will begin disclosing that data.