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Johnson & Johnson (JNJ) Seeks Buyer For Struggling Medical Device Unit Cordis Corporation (JNJ); Deal Could Fetch Up To $2 Billion

8/29/2014 6:37:55 AM

Johnson & Johnson Seeks Buyer For Struggling Medical Device Unit Cordis Corporation; Deal Could Fetch Up To $2 Billion Johnson & Johnson Seeks Buyer For Struggling Medical Device Unit Cordis Corporation; Deal Could Fetch Up To $2 Billion

August 29, 2014

By Jessica Wilson, Breaking News Staff

Johnson & Johnson (JNJ), the New Brunswick, NJ-based multinational pharmaceutical company and the world’s largest maker of health-care products, is looking to sell its Cordis unit, a Bridgewater, NJ-based medical devices business. David Welch of Bloomberg reported that “a person with knowledge of the matter” has said the business, which created the market for drug-coated heart stents, could garner up to $2 billion. The same person indicated the sales process has only just begun, while a representative at Johnson & Johnson declined to comment on the matter.

Last month, Chairman and Chief Executive Officer of Johnson & Johnson, speaking with Carol Massar of Bloomberg TV, said that the company, which owns 270 businesses, is open to divestiture of smaller business units. Interestingly, he also said he was “very confident” that a year from now “the size and scale of our medical device business will be paying off great for patients and for shareholders.”

Earlier this year, Johnson & Johnson sold its Ortho-Clinical Diagnostics unit, which focuses on blood-testing products, to the private-equity firm Carlyle Group for $4.5 billion. Potential buyers for Cordis could also include private-equity firms as well as other health-care companies.
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Cordis, which employs approximately 5000 people, saw its revenue rise less than 1% to $7.24 billion, although its sales rose 9% to $19.5 billion, according to a July statement. Despite the fact that Johnson & Johnson, according to the Wall Street Journal, “created the roughly $5 billion global market for cardiac stents," in 2011 the company announced it would abandon that business due to decreasing market share. Today, Cordis produces other types of stents, catheters and minimally invasive computer imaging. According to its website, the company has five focus areas:

• Cordis Cardiology for cardiovascular disease management
• Cordis Endovascular for the treatment of peripheral vascular and biliary obstructive diseases
• Conor Medsystems LLC for controlled vascular drug delivery technologies;
• Biosense Webster, Inc. for electrophysiology and medical sensor technology in cardiovascular procedures
• Cordis Biologics Delivery Systems Group in the emerging field of biologics delivery

The Wall Street Journal put together a list of other newsworthy medical device acquisitions to make the point that these acquisitions are a significant driver in the rising number of takeover deals market-wide. Deals specific to the medical-device industry include:

• Minneapolis, MN-based Medtronic (MDT) is in the process of acquiring Dublin, Ireland-based Covidien PLC (COV) for $43 billion.
• Warsaw, IN-based Zimmer Holdings Inc. (ZMH), in April, agreed to buy its competitor in device manufacturing, Warsaw, IN-based Biomet Inc. for more than $13 billion.
• Dublin, Ireland-based Endo International PLC (ENDP) has put AMS, its medical-device business, up for sale.

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