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Johnson & Johnson Reportedly Weighing
Multibillion Purchase of Alza

By Alan Clendenning   Associated Press
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NEW YORK — 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 Commission.

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 rules violations.

"It just didn't look like the place you would want a quality company going," said Sandra Hollenhorst, an analyst with Prudential Securities Inc.

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