Mumbai: Johnson & Johnson (J&J) is close to acquiring Pfizer Consumer Healthcare (PCH) for $16.6 billion in an all cash deal. The agreement has approved by the boards of directors of Pfizer and J&J, and the transaction, which is expected to close by the end of 2006.
J&J outbid British groups GlaxoSmithKline Plc and Reckitt Benckiser Plc to bag the deal at an acquisition price that represents nearly 4.3 times of Pfizer''s 2005 sales of $3.9 billion for the Pfizer products - higher than what analysts had expected, but Johnson & Johnson probably wanted to make up for time when it lost to Boston Scientific Corp. in January this year in the race to acquire medical devices group Guidant Corp.
Moreover, the acquisition will consolidate J&J''s position as the world''s largest supplier of consumer health-care and over-the-counter medicines as the PCH brands complement J&J''s consumer and OTC products, which include Band-Aid, Tylenol, Reach, Splenda, and the Clean & Clear, Aveeno and Neutrogena skin care brands.
Among the market leaders from Pfizer that J&J would acquire is the world''s top-selling mouthwash Listerine, Sudafed decongestant and Nicorette smoking cessation products. The addition of Listerine would transform J&J''s oral health care business by more than tripling it into a franchise in excess of $1 billion and expand its presence to more than 60 markets.
J&J is also expected to get the anti-allergy drug Zyrtec once Pfizer''s patent on the antihistamine lapses enabling J&J to market it in the US.
Pfizer''s widely recognised brands include Lubriderm, Visine, Neosporin, Sudafed, Zantac and Benadryl.
Pfizer also plans to repurchase up to $7 billion of its common stock in 2006 and another $10 billion in 2007 to ease the effect of Pfizer Consumer Healthcare (PCH) divestment on earnings.
The acquisition is expected to be accretive to J&J''s earnings per share on a cash basis in 2009.