Johnson and Johnson moves into the market for cosmetic procedures
J&J is in an acquisitive mood having agreed to buy Israeli bioscience firm Omrix for $438 million just last week.
The acquisition of Mentor takes the company in a new direction. J&J has a wide portfolio of big brands in pharmaceuticals and personal care but has yet to enter the high-margin business of cosmetic procedures.
As well as selling breast implants and equipment for liposuction operations, Mentor competes with Allergan in the market for facial wrinkle fillers.
Once under the J&J roof, Mentor is expected to operate as a stand-alone business reporting through Ethicon, which sells products for wound closure and cardiovascular surgery.
“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,” said Alex Gorsky, company group chairman for J&J.
In the short-run the acquisition of Mentor is poised to have a negative impact on profits. Upon closing, the transaction is expected to have a dilutive impact to J&J’s 2009 earnings per share of approximately $.03 - $.05.
On the publication of its third quarter results in October, J&J raised its full-year profit forecast to $4.50 - $4.53 per share, excluding one-time charges and other items.
So far this year the company has produced solid sales and profit growth with the consumer products segment outperforming pharmaceuticals.
The purchase of Mentor is expected to close in the first quarter of 2009.
