Carlyle Group makes $4.15B offer for J&J business

January 16, 2014 by Linda A. Johnson
In this Tuesday, July 30, 2013, photo, large banners hang in an atrium at the headquarters of Johnson & Johnson in New Brunswick, N.J. Johnson & Johnson said Thursday, Jan. 16, 2014, that it's been offered $4.15 billion by The Carlyle Group for its Ortho-Clinical Diagnostics business, a year after J&J began reviewing strategic options for the blood-testing unit as part of a routine pruning of its extensive family of businesses. (AP Photo/Mel Evans)

Johnson & Johnson said Thursday that it's been offered $4.15 billion by The Carlyle Group for its Ortho-Clinical Diagnostics business, a year after J&J began reviewing strategic options for the blood-testing unit as part of a routine pruning of its extensive family of businesses.

J&J, based in New Brunswick, New Jersey, has until March 31 to decide whether to accept the offer. Johnson & Johnson executives plan to discuss the offer Tuesday, when the health giant and consumer products company reports fourth-quarter results. The company said Thursday that it will consult with works councils and trade unions representing the unit's employees before making a decision.

The Ortho-Clinical business serves hospitals, testing laboratories and blood banks.

One division supplies equipment and chemicals to screen donated blood for HIV, hepatitis C and other serious diseases, and for typing donated blood to ensure patients get safe, compatible blood transfusions. The other division makes technology for advanced testing of blood to diagnose a range of health conditions and to monitor the effects of medication.

Established in 1937, Ortho Clinical Diagnostics is based in Raritan, New Jersey, and has factories in Rochester, New York; Pompano Beach, Florida, and Pencoed, Wales. It has more than 4,500 employees and operates in more than 30 countries worldwide.

Last January, CEO Alex Gorsky said J&J was looking at strategic options for Ortho-Clinical Diagnostics, which doesn't meet the company's long-held strategy of focusing on businesses that rank first or second in their markets.

In 2012, J&J reported revenue of $2.1 billion for the diagnostics business, down more than 4 percent from 2011. Revenue fell even more over the first nine months of 2013, when it was down 8 percent from the prior year at $1.42 billion.

Carlyle Group is a private equity and buyout firm based in Washington, D.C. If the sale goes through, Carlyle is expected to try to expand the business through increased marketing and creation of new products. Carlyle manages more than $185 billion worth of assets worldwide, according to its website.

In afternooon trading, Carlyle shares were up 1 cent at $37. Johnson & Johnson shares were down 25 cents at $94.55. The stock has seen a tremendous run-up since Gorsky took over in April 2012, with shares rising 46 percent from $64.75 back then.

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