Johnson & Johnson and CLOSURE Medical announced a definitive agreement whereby CLOSURE Medical will be acquired in a cash-for- stock exchange.
CLOSURE Medical is expected to operate as a stand-alone entity reporting through Ethicon, a Johnson & Johnson company, with whom CLOSURE Medical has worked since 1996 on the development of topical adhesives.
Under the terms of the agreement, CLOSURE Medical shareholders will receive $27.00 for each outstanding CLOSURE Medical share. The value of the transaction as of the anticipated closing date is estimated to be approximately $370 million based upon CLOSURE Medical’s approximately 15.6 million fully diluted shares outstanding, net of estimated cash on hand at time of closing. Upon closing, Johnson & Johnson is expected to incur an estimated one-time after-tax charge of approximately $68 million or $.02 per share, reflecting the write-off of in-process research and development (IPR&D) charges. This transaction does not affect Johnson & Johnson guidance (excluding IPR&D) as reviewed at the year-end analyst meeting held on January 25, 2005.
The board of directors of CLOSURE Medical Corporation has approved the transaction, which is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions. The agreement will require the approval of CLOSURE Medical’s stockholders and is expected to close during the second quarter of 2005.
CLOSURE Medical designs, develops and manufactures a number of medical adhesives and delivery devices based on a proprietary medical-grade cyanoacrylate technology for specific applications in wound care and wound closure. This technology is found in the family of DERMABOND Topical Skin Adhesive (2-octyl cyanoacrylate) products, which are marketed by Ethicon, Inc. under an exclusive distribution agreement. It is also found in BAND-AID Brand Liquid Bandage and other products for consumer and veterinary use. CLOSURE Medical’s cyanoacrylate formulations offer several advantages, including speed, ease-of-use and performance, versus other products.
“This acquisition demonstrates Ethicon’s commitment to further expand the successful DERMABOND business and advances our efforts in topical adhesives and surgical sealants,” said Dennis N. Longstreet, Company Group Chairman for Ethicon, Inc. “The capabilities and experience Ethicon expects to gain from this transaction can significantly contribute to the company’s sustained success in these important segments.”
Ethicon and CLOSURE Medical have both focused on further developing topical adhesives. CLOSURE Medical’s OMNEX Surgical Sealant recently received European CE Mark approval for use as an adjunct to sutures to achieve hemostasis in peripheral vascular surgery. Approval for a similar indication in the U.S. is anticipated in 2006.
“CLOSURE Medical and Ethicon have enjoyed a partnership to provide better health care and fulfill the unmet needs of patients and physicians around the world,” said Daniel A. Pelak, CLOSURE’s President and Chief Executive Officer. “We believe this acquisition will provide benefits to both our employees and shareholders.”
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