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Johnson & Johnson buys up Listerine brand

By Simon Pitman , 27-Jun-2006

New Jersey-based Johnson & Johnson has bought the Pfizer healthcare division for $16.6bn in a deal that wins the company the much sort after Listerine oral care brand.

"The acquisition builds upon our broad base in health care products and our leadership objectives in the consumer, pharmaceutical and medical devices and diagnostics market," said William Weldon, Johnson & Johnson CEO.

In fact its expansion into the oral care category is relatively unchartered waters for the company, and is one it is hoping to build upon.

The company said that the acquisition had tripled the size of its existing oral care business, giving it a turnover in excess of $1bn a year, and expanding the franchise into 60 markets.

Although mainstay toothpaste and toothbrush sales have remained pretty much stagnant in the global oral care market, the evolution of smaller niche categories, including mouthwash and tooth whitening products, has been helping to boost sales overall.

This has led to a recovery for the global oral hygiene market of late, with sales increasing by almost 8 per cent in 2004, a considerable improvement on previous years, according to Euromonitor.

Its research also shows that growth was buoyed by the strong performance of key Western European markets, as well as the development of niche product areas which is seeing the evolution of increasingly innovative products.

The bidding process has been intense in the last few weeks, pushing the value of the division up above market expectations. Interest had centered around the global Listerine brand, which companies were vying for in an effort to tap into the strong market growth.

Other bidders that were eyeing up the brand included British retailer Boots and leading global oral care player Colgate-Palmolive, which only last week said it was still hoping to take part in the later stages of the bidding.

Colgate had already said that it was only interested in the Listerine brand and would have spun off other brands in the healthcare portfolio, which include Nicorette smokers patches, together with other over-the-counter pharmaceutical products including Sudafed, Neosporin, Zantac and Benadryl.

Pfizer said that the agreement to sell the division to Johnson & Johnson is part of a review of its strategic operations which will see the company concentrating on its pharmaceutical activities.

"We will now be in an even stronger position to capitalize on the many opportunities we see in our core pharmaceuticals business, as well as enhance our returns to our shareholders," said Pfizer chairman and CEO Hank McKinnel.

He added that the proceeds of the sale would go towards leveraging internal research and development as well as continuing to acquire products and technology that will drive long-term growth.

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