Carlyle Group Offers to Buy Johnson & Johnson’s OCD Biz

Carlyle Group Offers to Buy Johnson & Johnson’s OCD Biz

Johnson & Johnson (JNJ) has received a binding offer for its Ortho-Clinical Diagnostics (OCD) business from The Carlyle Group (CG). The Carlyle Group is looking to acquire the OCD business for $4.15 billion.

If Johnson and Johnson accepts the offer by Mar 31, the deal should close toward mid-year.

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Johnson and Johnson had been looking at different strategic options (including divestment) for its OCD business for quite some time. The divestment, if it goes through, would allow the company to maximize shareholder value and focus more on core and higher growth areas (including companion diagnostics, which supports pharmaceutical pipeline development). We are positive on the potential disposal of the OCD segment.

We note that Johnson and Johnson is not the only company focusing on its core assets and divesting (or planning to divest) its non-core assets to drive growth. Several other big pharma companies have either divested or entered into agreements to divest their non core assets. For example, GlaxoSmithKline (GSK) divested several non-core brands from its Consumer Healthcare segment.

In the near term, we believe that investor focus will remain on the release of fourth quarter and full year 2013 results (Jan 21). At that time, Johnson and Johnson’s plans regarding the acceptance of the offer should be clear.

Meanwhile, the company suffered a setback with Xarelto receiving a negative vote from the U.S. Food and Drug Administration’s Cardiovascular and Renal Drugs Advisory Committee. Johnson and Johnson is looking to get Xarelto approved in combination with standard antiplatelet therapy to reduce the risk of thrombotic cardiovascular events in patients with acute coronary syndrome.

Johnson and Johnson carries a Zacks Rank #3 (Hold). Some better-ranked stocks include Allergan (AGN). The stock carries a Zacks Rank #2 (Buy).

ALLERGAN INC (AGN): Free Stock Analysis Report

CARLYLE GROUP (CG): Free Stock Analysis Report

GLAXOSMITHKLINE (GSK): Free Stock Analysis Report

JOHNSON & JOHNS (JNJ): Free Stock Analysis Report

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