A Medical Device Daily
Further expanding its franchise in the adhesives sector, medical products Goliath Johnson & Johnson (J&J; New Brunswick, New Jersey) has signed an agreement to purchase Closure Medical (Raleigh, North Carolina), a leader in biomaterial-based medical devices, in a cash-for-stock exchange deal.
Closure shareholders will receive $27 for each outstanding Closure Medical share. The value of the transaction, as of the anticipated closing date, is estimated at about $370 million, based upon Closure's fully diluted shares outstanding of about 15.6 million. Upon closing, J&J is expected to incur a one-time after-tax charge of about $68 million or 2 cents a share, reflecting write-off of in-process R&D charges. This transaction does not affect J&J's guidance as reviewed at the year-end analyst meeting held on Jan. 25.
Closure is expected to operate as a stand-alone entity reporting through Ethicon (Somerville, New Jersey), a J&J company, with which Closure has worked since 1996 on the development of topical adhesives.
The board of directors of Closure has approved the transaction, which is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions. The agreement will require the approval of Closure's stockholders and is expected to close during the second quarter of 2005.
Closure develops 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, marketed by Ethicon 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 Longstreet, company group chairman for Ethicon. "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 have both focused on further developing topical adhesives. Closure Medical's Omnex Surgical Sealant recently received 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 healthcare and fulfill the unmet needs of patients and physicians around the world," said Daniel Pelak, Closure 's president and CEO. "We believe this acquisition will provide benefits to both our employees and shareholders."
J&J, bills itself as the world's most comprehensive and broadly based manufacturer of healthcare products, as well as a provider of related services, for the consumer, pharmaceutical, and medical devices and diagnostics markets.
Ethicon develops products for surgery, wound management and advanced wound care treatment marketed through four divisions: Ethicon Products for precise wound closure and tissue repair; Cardiovations for minimally invasive cardiac procedures; Gynecare for minimally invasive women's health procedures, and J&J Wound Management for hemostasis and advanced wound care.