Mentor deal gives J&J foothold in region
In the year’s biggest deal involving a tri-county-based company, health-care giant Johnson & Johnson has agreed to purchase Santa Barbara-based Mentor for $1.07 billion.
“This is a really, really big day for us as a company,” Mentor President and Chief Executive Officer Joshua Levine told the Business Times the day of the announcement
Johnson & Johnson will begin a tender offer to purchase all outstanding shares of Mentor at $31 – nearly double Mentor’s Nov. 28 closing price of $16.15. Upon news of the sale on Dec. 1, Mentor’s stock rallied to close at $30.58.
Since its founding in 1969, Mentor has grown to become a national leader in the medical aesthetic business, with 88 percent of its sales coming from breast implant products, according to recent filings with the Securities and Exchange Commission. Based in New Jersey, Johnson & Johnson is one of the biggest players in the health products industry.
“We’ve been in the aesthetic medical space for really quite a long time – 30-plus years – and this is an opportunity for us to really, in my mind, end up with the best of both worlds,” Levine said.
For Levine, the best of both worlds is in reference to the terms of the agreement whereby Mentor will act as a stand-alone company that reports to Ethicon, Inc., a Johnson & Johnson surgical procedure manufacturing company. It will, however, retain its Santa Barbara headquarters.
Johnson & Johnson offered Levine the opportunity to stay on as Mentor’s president, which he has “very excitedly” accepted, he said.
What the acquisition means in the long-run for Mentor’s 1,300 worldwide employees and those at its Santa Barbara headquarters has yet to be solidified, though Levine said many of the executives plan to stay on board through the transition.
Mentor is currently ranked one of the 10 largest public companies in the Tri-Counties, by capitalization, and generated revenues of $373.2 million in the fiscal year 2007 ending March 31, 2008. Though its sales jumped 39 percent from 2005 to 2007, Bloomberg News reported that its breast implant revenue dropped 21 percent to $74.4 million in this year’s fiscal second quarter, which ended Sept. 27.
Its gross profit for fiscal 2007 was $274 million.
Mentor specializes in both saline- and silicone gel-filled implants. One of Mentor’s neighbors to the south, Carpinteria-based NuSil Silicone Technology, may be impacted by the acquisition; however, its officials declined to comment.
Mentor’s product list also includes facial aesthetics and software, consulting and business-management tools to help plastic surgeons augment their business.
Though the company is headquartered in Santa Barbara, Mentor owns and leases properties worldwide, including offices and manufacturing space five other countries and four other states.
Levine would not say how long the deal with Johnson & Johnson has been in the works but said Mentor and Ethicon have crossed paths for years. He added that the acquisition “is a more recent situation.”
In the meantime, the two companies will continue to operate separately, “but we’ll be launching an integration team effort to find out what will be the best way to align forces going forward,” said Barbara Montersor, Ethicon’s worldwide vice president for communications.
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