J&J; buys breast implant firm

TRENTON, N.J. —  In a move to become a major player in cosmetic and reconstructive surgery, healthcare products company Johnson & Johnson said Monday that it would buy cosmetic-product and breast implant maker Mentor Corp. for $1.07 billion.

Analysts said J&J; was paying “a giant premium” for the maker of MemoryGel breast implants, liposuction equipment and “barrier” skin repair products, with an eye to their long-term value for an aging population.

Under the deal, J&J; will start a cash tender offer for $31 per share -- nearly double Mentor’s Friday closing price of $16.15 -- for a total of $1.07 billion. J&J; will assume Mentor’s net debt, about $50 million, and make the company a stand-alone unit in its Ethicon Inc. business, a provider of sutures and other surgical products.

The industry is “a good space for J&J; to get bigger in because it’s a space with the least cost-control pricing pressures,” inasmuch as patients, rather than insurers or government health programs, generally pay for cosmetic surgery, said Erik Gordon, associate dean and head of biomedical industry programs at Stevens Institute of Technology in Hoboken, N.J.

Mentor shares jumped $14.43, or 89%, to $30.58; J&J; shares, weighed down by a big decline in the broader market, fell $3.25, or 5.6%, to $55.33.

Santa Barbara-based Mentor has about 1,300 employees and had $373 million in 2007 sales. Significant layoffs are not expected.