Johnson & Johnson (NYSE: JNJ) offered to acquire breast implant maker Mentor Corp (NYSE: MNT). At $31 per share, J&J's tender offer for Mentor is a 92% premium to its closing price last Friday.
J&J plans to run the $373 million Mentor as a stand-alone business under its Ethicon division, reasoning that the skills of its 1,300 employees will strengthen J&J's presence in aesthetic and reconstructive medicine. Mentor is not just about breast implants -- mostly for cancer patient reconstruction. It is also awaiting FDA approval for face fillers, which would enable Mentor (and now J&J) to compete in the market for wrinkle treatment that Botox now dominates.
The Mentor announcement comes on the heels of a $438 million J&J deal to buy Omrix Biopharmaceuticals Inc.
Mentor's stock popped 90% in response to the $1.12 billion takeover deal. This is pretty good for a day when the Dow is plunging over 300.
J&J's decision to make acquisitions in a down market looks pretty shrewd to me as long as these acquisitions eventually add to earnings.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.
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