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J&J Gets $2.1B Offer for LifeScan Diabetes Device Unit

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Johnson & Johnson (JNJ - Free Report) announced that it has received a binding offer of approximately $2.1 billion from a private equity firm, Platinum Equity, for its LifeScan diabetes device unit. The LifeScan unit makes blood glucose monitoring products and generated revenues of $1.5 billion last year.

J&J stock has declined 3.8% this year so far, which compares unfavorably with a gain of 1.2% recorded by the industry.

J&J has time until Jun 15 to accept the offer, failing which it will expire. If J&J accepts the offer, the transaction is expected to close by the end of the year.

Sales in J&J’s Diabetes Care franchise declined 9.7% in 2017 to $1.6 billion due to price decline and competitive pressure.

J&J has been evaluating potential strategic options for its Diabetes Care Units specifically, LifeScan, Animas Corporation, and Calibra Medical since early last year. In fact, in October, J&J announced that it will close operations of its Animas Corporation diabetes care unit and exit its insulin pump business. Animas will stop manufacturing Animas Vibe and OneTouch Ping insulin pumps. J&J said that per a deal with medical device maker, Medtronic, Inc. (MDT - Free Report) , patients using an Animas insulin pump will be offered the option to transfer to a Medtronic pump.

J&J carries a Zacks Rank #3 (Hold). Better-ranked large-cap pharma stocks include AbbVie, Inc. (ABBV - Free Report) and Pfizer Inc. (PFE - Free Report) , both with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AbbVie’s earnings per share estimates have moved up 14% for 2018 and almost 10% for 2019 in the last 60 days. Shares of the company have shot up 18.4% this year.

Pfizer’s earnings per share estimates have moved up 6.9% for 2018 and 5.9% for 2019 in the last 60 days. Share price of the company has increased 2.5% in the past year.

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