Johnson & Johnson To Buy Pfizer Unit

Health care products maker Johnson & Johnson said Monday it is buying drug maker Pfizer Inc.'s consumer health care unit for $16.6 billion in cash. Pfizer said it would buy back stock worth roughly the same amount.

The deal would give New Brunswick, N.J.-based Johnson & Johnson brand names including Listerine, Nicorette, Visine, Sudafed and Neosporin as part of a unit whose reported sales totaled $3.9 billion in 2005. Pfizer had been reviewing its strategic options for the division since February so it could focus on its prescription drug business.

Pfizer said it will buy back up to $17 billion in shares, including up to $7 billion this year and $10 billion in 2007. The plan reflects an increase to $18 billion from $5 billion in the company's stock repurchase authority.

Johnson & Johnson will also acquire the U.S. over-the-counter switch rights to the prescription antihistamine Zyrtec upon patent expiration. Its own brands already include Band-Aid, Tylenol and Neutrogena.

"This acquisition builds upon our broad base in health care products and our leadership objectives in the consumer, pharmaceutical and medical devices and diagnostics markets," Johnson & Johnson Chairman and Chief Executive William C. Weldon said in a statement.

The deal, which was approved by the boards of both companies and is subject to regulatory and shareholder approval, is expected to close by year's end and boost Johnson & Johnson's earnings in 2009.

New York-based Pfizer said it expects about $13.5 billion in proceeds, after taxes, from the Pfizer Consumer Healthcare sale. Due to the stock buyback, the company said it doesn't expect the sale to lower 2007 earnings, but it expects a profit boost in 2008.