J&J, Pfizer Sell Five Brands to Chattem for $410 Million

Divestiture Clears Way for Pending $16.6 Billion Consumer-Products Acquisition

By Published on .

CINCINNATI (AdAge.com) -- Johnson & Johnson and Pfizer have sold five drug and personal-care brands to Chattem for $410 million. The deal is aimed, at least in part, at gaining regulatory clearance for J&J's pending $16.6 billion acquisition of Pfizer's consumer-products business.
Act, Balmex and Kaopectate are three of the brands Chattem is acquiring from Pfizer and J&J for $410 million.
Act, Balmex and Kaopectate are three of the brands Chattem is acquiring from Pfizer and J&J for $410 million.

A handsome price
J&J appeared to get a handsome price of more than three times sales for the brands, Act oral rinse, Balmex diaper-rash ointment, Kaopectate, Unisom and Cortizone. According to people familiar with the matter, the brands had combined sales of $110 million to $125 million. The companies didn't disclose combined sales of the brands.

In a statement, Chattem said the divestitures were motivated by the sellers' need to satisfy regulatory requirements for the J&J acquisition, which is expected to close in January.

A J&J spokesman said no divestitures have been required yet as part of the Federal Trade Commission review of the deal but that the divestitures had been made to "facilitate FTC clearance."

But people familiar with the matter said strategic factors also factored in as J&J sorted through which brands it wanted to keep in cases where incoming Pfizer brands competed in the same categories as existing J&J products.

The deal, for example, will bring to J&J Pfizer's Plax and Desitin, close competitors of the Act and Balmex brands J&J is divesting. Pfizer is divesting the Kaopectate and Cortizone brands, as J&J opted to keep its existing brands Immodium and Cortaid instead.

Agency assignments
WPP Group's JWT, New York, handles Kaopectate and Unisom for Pfizer. Interpublic Group of Cos.' Alchemy handles Balmex for J&J. A spokeswoman for Chattem didn't immediate return a call for comment on agency assignments, but the company generally has tended to handle its stable of brands, which include Gold Bond and IcyHot, on a project basis rather than through agencies of record.

"Each of these brands has a leadership position within its category, a loyal consumer base and a brand name with staying power," Zan Guerry, chairman-CEO of Chattem, said in a statement. "These brands are responsive to advertising and can be extended with new products, which plays perfectly into our proven track record."
In this article:
Most Popular