Reports that health care giant Johnson & Johnson
may buy drug delivery specialist Alza Corp. in a multibillion stock
deal sent Alza's stock soaring Monday.
Alza, based in Mountain View, Calif., developed the technology
for the best-selling Nicoderm nicotine patches sold by
GlaxoSmithKline. It also makes time-released capsules that allow
people to take fewer pills, and systems that use electricity to
push drugs through skin.
In midday trading Monday on the New York Stock Exchange., Alza
stock rose $7.30, or 24 percent, to $37.35. J&J; shares dropped
$2.75, or 3 percent, to $85.46, also on the NYSE.
The proposed purchase by the maker of Band-Aids and Tylenol,
based in New Brunswick, N.J., had been rumored for weeks, analysts
said. Details about the deal first appeared Monday in The Wall
Street Journal and London's Financial Times.
Spokesmen for J&J; and Alza did not immediately return telephone
messages left Monday seeking comment.
The two companies are in "advanced discussions" on a deal that
would value Alza shares at between $42 and $48 per share in a
transaction worth more than $12 billion, the Journal reported. The
Financial Times valued the deal at $8 billion.
Alza has been considered fair game since it called off a deal to
be bought for $7.3 billion by North Chicago-based Abbott
Laboratories, the nation's largest maker of medical diagnostic
tests. The purchase was halted after the companies could not come
to terms with antitrust concerns raised by the Federal Trade
Alza officials also may have been reluctant to go forward
because Abbott in late 1999 signed a consent decree with the Food
and Drug Administration to pay a $100 million fine and stop selling
more than 100 of its products pending correction of federal quality
"It just didn't look like the place you would want a quality
company going," said Sandra Hollenhorst, an analyst with
Prudential Securities Inc.