NEW BRUNSWICK, N.J. – Johnson & Johnson announced Monday that it has entered into a definitive agreement to acquire Pfizer Consumer Healthcare for $16.6 billion in cash.
The Johnson & Johnson board of directors has approved the deal, which must still undergo U.S. antitrust and European Union merger control regulation, the company said. The transaction is expected to close by the end of 2006.
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Pfizer Consumer Healthcare’s global business of personal care and over-the-counter products achieved sales of $3.9 billion in 2005. The company’s brands include Listerine oral care products and the Nicorette line of smoking cessation treatments, along with Lubriderm lotions, Visine eye drops, Neosporin ointments, Sudafed and Benadryl allergy pills, and Zantac antacids.
“This combination creates the world’s premier consumer health care company,” said William C. Weldon, chairman and CEO of Johnson & Johnson, in a statement. “Our consumer business has a long tradition of outstanding performance and a proven track record in growing consumer brands at above-category levels through innovation. This acquisition builds upon our broad base in health care products and our leadership objectives in the consumer, pharmaceutical and medical devices and diagnostics markets.”
The addition of Listerine alone will more than triple Johnson & Johnson’s oral care business, the company said, turning it into a franchise “well in excess” of $1 billion with a presence in more than 60 markets.
Under the terms of the agreement, Johnson & Johnson will also acquire the U.S. over-the-counter switch rights to Zyrtec, Pfizer’s once-a-day, non-sedating prescription antihistamine, upon patent expiration.
“We see the consumer health care markets as increasingly attractive growth opportunities as consumers take greater interest in and responsibility for their own health,” Weldon said. “In addition, higher levels of disposable income in developing nations are helping drive increased demand for consumer health products.”
Johnson & Johnson brands include Band-Aid, Tylenol, Reach toothbrushes, Splenda sweeteners, and the Clean & Clear, Aveeno and Neutrogena skin care brands.
Johnson & Johnson said it expects the deal to be accretive to its earnings per share on a cash basis in 2009. The deal will also “provide significant opportunities to leverage the sales, administration and supply chain of both organizations globally,” the company said.
A Webcast of a conference call for financial analysts is available at www.jnj.com by clicking on “Webcasts/Presentations” in the Investor Relations section.
