J&J To Buy Conor Medsystems

Johnson & Johnson increased its stakes in the cardiovascular device market with the purchase on Friday of Menlo Park, CA-based Conor Medsystems for $1.4 billion, according to Reuters News Services.
 
The New Brunswick, NJ-based medical device manufacturer will pay $33.50 for each share of Conor Medsystems which makes drug-eluting stents used to keep blocked arteries open. The offer represents a 22% premium to Conor Medsystems’ closing share price of $27.52 on Nasdaq on Thursday.

The deal comes nearly a year after J&J lost out to rival Boston Scientific of Natick, MA in a bidding war for heart device maker Guidant of Indianapolis, IN. After that, analysts had expected J&J to re-enter the acquisition market as it pursued new growth strategies.

J&J spokesman Jeffrey Leebaw said the Conor Medsystems deal was unrelated to losing out on Guidant.

Conor Medsystems’ CoStar stent, which provides controlled drug delivery, is currently sold outside the United States. The stent is an investigational device in the United States, where enrollment in a pivotal clinical trial has been completed, according to Johnson & Johnson.

J&J unit Cordis, which Conor Medsystems will become part of after the deal, sells coronary artery stents.

The transaction, which is subject to anti-trust clearance and approval by Conor Medsystems’ shareholders, is expected to close in the first quarter of 2007. The boards of directors of both companies have approved the deal.

Upon closing, J&J said it expects to incur an after-tax charge of about $600 million, reflecting the write-off of in-process research and development charges.