Centocor Inc.
Dow Jones Newswires -- May 3, 1999
Centocor Up 4.5% On Johnson & Johnson Takeover Rumor
By Kopin Tan
NEW YORK (Dow Jones)--Takeover rumors continued to follow Centocor Inc. (CNTO) as the biotechnology company's stock rose 3.4% in heavy trading Monday.
Speculation that Centocor will be acquired by Johnson & Johnson (JNJ) picked up steam over the weekend. The Malvern, Pa., company's stock opened at 47 13/16 Monday, up nearly 8% from Friday's closing price of 44 3/8, before settling back. It was recently up 1 1/2 to 45 7/8 on Nasdaq volume of 2.8 million, compared with average daily volume of 1.6 million.
While the companies are said to be in talks, people close to the negotiations said reports that Centocor is on the verge of an agreement remain a rumor at this time.
Officials at Johnson & Johnson and Centocor declined to comment.
Although analysts have said it wasn't a proposal that made the most compelling sense, the takeover rumor has circulated in the marketplace over the last two weeks. As reported, Centocor stock jumped 21% on April 21, a rise that traders traced to takeover rumors. Centocor's call options also have been unusually active, indicating bullish sentiment toward the stock.
Still, doubts remain regarding a Johnson & Johnson takeover of Centocor, which researches and develops drugs and diagnostic products for cardiovascular, cancer and other diseases.
While Johnson & Johnson has been looking to supplement its pipeline of drugs and research with acquisitions, some analysts say it may be tough for the medical products giant to capitalize on its marketing muscle with several of Centocor's drugs.
For one thing, one of Centocor's key products, ReoPro - which is used to prevent blood clotting in patients undergoing angioplasty - is marketed under a licensing agreement with Eli Lilly & Co. (LLY), said Matthew Geller, a CIBC Oppenheimer analyst.
Another Centocor product, Remicade, an anti-inflammatory medication used to treat Crohn's disease, is marketed in partnership with Schering-Plough Corp. (SGP) in markets outside the U.S., added Caroline Copithorne, a Prudential Securities Inc. analyst.
On the other hand, industry observers pointed out that Johnson & Johnson is looking aggressively to expand the biotechnology segment of its medical products empire.
In addition, Johnson & Johnson's Cordis Cardiology unit, an interventional cardiology operation it had previously acquired, would offer an obvious marketing and distribution channel for some of Centocor's products.
-Kopin Tan; 201-938-2202
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