J&J buys breast implant maker Mentor Corp for $1.07 billion

Johnson & Johnson, the world's largest health-care company, said on today it would acquire breast implant maker Mentor Corp for $1.07 billion as the giant diversified healthcare company pushes into the market for aesthetic medical products.

Under the terms of the agreement, Johnson & Johnson will commence a tender offer to purchase all outstanding shares of Mentor at $31.00 per share. The tender offer is conditioned on the tender of a majority of the outstanding shares of Mentor's common stock on a fully diluted basis. Holders of Mentor will get almost double the $16.15 close for the Santa Barbara, California, company as of 28 November in New York Stock Exchange composite trading.

The closing is conditioned on clearance under the Hart-Scott-Rodino Antitrust Improvements Act, and other customary closing conditions. The $1.12 billion estimated net value of the transaction is based on Mentor's 34.6 million fully diluted shares outstanding, plus estimated net debt at time of closing.

The boards of directors of Johnson & Johnson and Mentor have approved the transaction.

Johnson & Johnson, which plans to run Mentor as a standalone business under its Ethicon division, said the acquisition would strengthen its presence in aesthetic and reconstructive medicine.

The acquisition of Mentor will provide Ethicon with an opportunity to strengthen its presence in aesthetic and reconstructive medicine and raise the standard for innovation and patient outcomes in this market worldwide.

Alex Gorsky, company group chairman for Johnson & Johnson with responsibility for the Ethicon business worldwide, said, "The addition of Mentor, a market-leader and one of the most respected companies in the aesthetic space, expands our capacity to provide physicians with products that can restore patients' appearance, self-esteem and quality of life. Ethicon is a company that is committed to bringing evidence-based medicine and the highest standards of quality to the aesthetic and reconstructive medical device category. Mentor also shares that commitment to science, health and wellness."

Josh Levine, president and chief executive officer of Mentor, said, "Ethicon and Mentor share a common set of values in terms of commercial market leadership, the commitment to developing innovative, science based products, and unwavering service to physicians and patients. This transaction allows Mentor to expand our product portfolio and significantly grow our global reach. The opportunity to become part of Ethicon , one of the largest and most respected surgical companies in the world, will have a positive impact on our business and on all our key constituents."

Upon closing, the transaction is expected to have a dilutive impact to Johnson & Johnson's 2009 earnings per share of approximately $.03 - $.05. The transaction is expected to close in the first quarter of 2009.