J&J confirms $10.5 billion bid for Alza

After a day of speculation, Johnson & Johnson has confirmed that it hasentered into an agreement to acquire Alza Corp in a stock deal valued at $10.5 billion, as of close of business on March 26 and based upon the latter's 295 million fully-diluted shares outstanding. Alza shareholders, who have to vote on the deal, will receive 0.49 shares of J&J stock for each Alza share they own.

The transaction is expected to close by the early part of the third quarter of 2001, and be dilutive to J&J's earnings for this year and 2002. Excluding one-time charges, these dilutions, in terms of earnings per share, are estimated to be $0.14 and $.05 in 2001 and 2002, respectively. In announcing the merger, J&J suggested that analysts should reduce their range of EPS estimates of $3.80-$3.88 by $0.10 for 2001, though forecasts for 2002 should remain unchanged.

J&J's chief executive, Ralph Larsen, said that the merger, which he described as "an excellent strategic fit," will strengthen several of the firm's pharmaceutical franchises, "while accelerating sustainable revenue growth and bringing us important technologies for the future." The company's vice chairman, William Weldon, added that products and technologies from Alza will enhance existing J&J growth platforms in areas such as oncology, women's health, urology, pain management and the central nervous system. Mr Weldon also said that Alza will retain its name and management as a free-standing J&J company.