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J&J nabs Centocor for $4.9B
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July 21, 1999: 8:39 a.m. ET
Drug maker will gain control of more biotech products under deal
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NEW YORK (CNNfn) - Johnson & Johnson and biotechnology firm Centocor agreed Wednesday to merge in a stock swap worth an estimated $4.9 billion, boosting J&J's offerings of cancer and cardiology treatments.
Johnson & Johnson will pay $61 in stock for each share of Centocor. The exact exchange rate will depend on the average closing market price of J&J shares in the 20 days prior to the closing of the deal.
Shares in Centocor (CNTO) dropped 2-7/8 to 49-1/2 on Tuesday. There are about 83 million outstanding shares of Centocor stock.
Centocor, based in Malvern, Pa., will retain its name and management.
"Centocor is an excellent fit with Johnson & Johnson, with major products in cardiology and gastrointestinals that are poised for immediate growth through our network," Johnson & Johnson chairman Ralph S. Larsen said in a statement. He also said Centocor is seeking regulatory approval of a promising new rheumatoid arthritis drug.
The two companies broke off discussion in May after disagreements over price, The Wall Street Journal reported Wednesday.
The deal requires shareholder and regulatory approval. Johnson & Johnson said it hopes to complete the merger in the fourth quarter.
Also Wednesday, Centocor reported growth in second-quarter earnings that matched the expectations of analysts polled by the First Call Corp.
Net income totaled $9.1 million, or 13 cents per diluted share, compared with $1.9 million, or 3 cents per share, in the year-earlier quarter. The 1998 results do not include a after-tax gain of $17.4 million, or 24 cents per share, from one-time items.
Product sales reached a record $115.1 million, up 65 percent.
Shares of Johnson & Johnson, a component of the Dow Jones industrial average based in New Brunswick, N.J, added ½ to close at 96-7/16 Tuesday.
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