J&J plans buyout of Cougar Biotech for $1 billion

Johnson & Johnson (J&J), the health-care giant is set to acquire cancer drug developer Cougar Biotechnology Inc. for about $1 billion, aiming to expand its business in the area of oncology - the branch of medicine dealing with tumors.

J&J announced on Thursday that it has entered into an agreement with Cougar to initiate an offer for acquisition of all the outstanding shares of Cougar at $43 per share in an all cash deal. The offer price is at a premium of 16.28 per cent to Thursday's closing price of $36.98 in Nasdaq.

J&J said the deal will be completed in the third quarter, which will trim down the 2009 earnings per share of the company by 2 to 3 cents.
 
The Los Angeles-based cancer drug developer has in its portfolio a key product, abiraterone acetate–a drug for the treatment of prostate cancer – in the late-stage testing along with other drugs in early stages of development, for the treatments of breast cancer and hematological malignancies.
 
The prostate cancer pill is intended to stop tumer cells reproduction, thereby prolonging the life of the patients, with negligible side effects.

Cougar, as well as its competitor San Fransisco-based Medivation Inc. would be presenting key data at the American Society of Clinical Oncology annual meeting scheduled on May 29.

The move by J&J, the New Jersey-based global manufacturer of pharmaceutical, medical devices and packaged goods indicate its interest in smaller companies to compensate for the patent expiry problems, whereas other peers resort to mega deals.

Recent mega deals include Pfizer's $68 billion takeover of Wyeth, Merck's $41-billion buyout of Schering-Plough and Roche's $47 billion acquisition of Genetech. (See: Pharma majors under merger pressure after Merck-Schering deal)