Deal expands Johnson & Johnson vision products
Johnson & Johnson is expanding its Jacksonville-based eye care products unit with a major acquisition.
The medical products giant announced a $4.3 billion agreement to buy Abbott Medical Optics, a deal that adds $1.1 billion in annual sales and three ophthalmic products to its Johnson & Johnson Vision Care Inc. division.
Before this expansion, J&J Vision Care has been a contact lens company that produced $1.3 billion in sales in the first half of this year.
The acquisition of the Abbott Laboratories subsidiary will expand the business with products in cataract surgery, laser refractive surgery and consumer eye health.
“Eye health is one of the largest, fastest growing and most underserved segments in health care today,” said Johnson & Johnson Group Chairman Ashley McEvoy in a news release.
“With the acquisition of Abbott Medical Optics’ strong and differentiated surgical ophthalmic portfolio, coupled with our world-leading Acuvue contact lens business, we will become a more broad-based leader in vision care,” she said.
J&J Vision Care spokeswoman Angela Sekston said it’s too early to speculate if the deal will have an impact on the division’s headquarters in Jacksonville.
The company employs about 1,800 people in Jacksonville at the headquarters and contact lens production facilities, and more than 3,000 people worldwide.
Abbott’s vision care business, headquartered in Santa Ana, Calif., employs nearly 4,000 people worldwide.
Sekston said a key to the deal for Johnson & Johnson is the addition of the cataract surgery business. Abbott is a leader in surgical technology for cataracts, a leading cause of preventable blindness.
“Globally, there is a strong need for innovation to end blindness and to meaningfully improve vision for patients throughout their lifetime, so everyone at Johnson and Johnson Vision Care here in Jacksonville is excited to be expanding into the broader eye health market,” she said.
Abbott’s other eye products are laser vision (LASIK) technologies and consumer products, including over-the-counter drops for dry eyes and cleaning systems for contact lenses.
Abbott Medical Optics started in 1976 as a developer of intraocular lenses for cataract patients. The business, then known as Advanced Medical Optics, was acquired by Abbott in 2009 for $2.8 billion.
Johnson & Johnson is paying $4.3 billion in cash for the business, producing a nice profit for Abbott for its seven-year investment.
Abbott said it is selling the optics unit to realign its businesses to focus on cardiovascular devices and expanding diagnostics.
“Our vision care business will be well-positioned for continued success and advancement with Johnson & Johnson,” Abbott CEO Miles White said in a news release.
Johnson & Johnson has operated the contact lens unit since 1981 when it acquired a Jacksonville company called Frontier Contact Lenses, a business founded in 1959.
The business was renamed Vistakon and operated under that name for three decades, but the company transitioned to the Johnson & Johnson Vision Care name over the last couple of years.
Johnson & Johnson said it expects to complete the acquisition in the first quarter of 2017 and said it will be “modestly accretive immediately” to its earnings per share.
Black Knight jumps on upgrade
Black Knight Financial Services Inc.’s stock jumped to a new high last Monday after Keefe, Bruyette & Woods analysts raised their rating on the Jacksonville-based company, which provides technology services for mortgage lenders.
“We believe that BKFS has numerous growth opportunities that will enable it to grow revenues and EBITDA (earnings before interest, taxes, depreciation and amortization) at high-single to low-double-digit rates over the medium term,” analyst Chas Tyson said in a report as he raised the rating from “market perform” to “outperform.”
“Further, we think the company’s announced client wins so far provide visibility into significant growth, while the cash flow thrown off by MSP gives it the flexibility to add to growth inorganically where it finds attractive opportunities,” he said.
Black Knight’s mortgage servicing platform (MSP) dominates the field, with nearly two-thirds of all U.S. first mortgage loans processed through the system.
Tyson said the company’s flagship product “has no meaningful competition and still has significant growth opportunities.”
Black Knight’s stock closed last Monday up $1.23 to $40.94 after trading as high as $42.19 early in the day. Tyson set his price target at $46.
Black Knight was spun off from Fidelity National Financial Inc. with an initial public offering in May 2015, and had already risen significantly from its IPO price of $24.50.
Although the price has risen, Tyson still thinks it offers investors a good opportunity.
“We think the price for BKFS’s equity meets Warren Buffett’s dictum that it’s better to pay a fair price for a good business than a good price for a fair business,” he said.
ParkerVision case delayed until March
ParkerVision Inc. said last week the hearing at the International Trade Commission for its patent infringement case against three major electronics manufacturers has been rescheduled for March.
That’s something of a disappointment because the Jacksonville-based company, which is developing technology for wireless applications, had hoped to have the case resolved soon.
The hearing was originally scheduled for August but was delayed by the ITC for undisclosed medical reasons.
ParkerVision brought the case to the ITC last year against Samsung Electronics Co. Ltd., Qualcomm Inc., Apple Inc. and LG Electronics Inc., alleging they have been illegally using ParkerVision’s patented technology without permission.
ParkerVision says its technology improves the performance of wireless devices.
Samsung was dropped from the case in July after reaching an agreement with ParkerVision to use the technology, increasing ParkerVision’s confidence that its infringement claims against other manufacturers are valid.
Of course, ParkerVision’s ability to profit from its agreement with Samsung took a big hit with the recent recalls of Samsung smartphones over concerns that its batteries are a fire hazard.
ParkerVision has several other legal actions pending, including a lawsuit against the German subsidiary of LG.
That case is scheduled for a hearing in Munich Regional Court in November, ParkerVision said last week, but the court is encouraging a settlement agreement and ParkerVision is hoping for a decision before the hearing.
“While we had hoped to present our case to the ITC before the end of the year, we remain encouraged despite this scheduling delay, in particular because our action in Germany is moving along at a rapid pace. We look forward to a near-term resolution in that jurisdiction,” CEO Jeff Parker said in a news release.
PHH Corp. cuts New York jobs
A loss of business from a key customer for mortgage company PHH Corp. is costing jobs at the company’s facility near Buffalo, N.Y.
PHH filed a Worker Adjustment and Retraining Notification with the state of New York last week saying it is cutting 91 of 294 jobs at the facility.
The notice follows an announcement by PHH last month that HSBC Bank USA is selling servicing rights to 139,000 mortgage loans currently subserviced by PHH, which were handled at the office.
PHH’s mortgage operations were run basically out of offices at its New Jersey headquarters site and in Jacksonville. But in 2012, it began operating another facility near Buffalo after HSBC transferred its mortgage processing and servicing business to PHH. About 400 HSBC workers were transferred to PHH.
PHH has downsized its Jacksonville operations as its business level declined, lowering employment from more than 1,000 three years ago to about 450 last fall when it decided to move to a smaller office site in Jacksonville.
Lennar buying WCI Communities
Lennar Corp. on Thursday announced a $643 million agreement to buy WCI Communities Inc. in a merger of two of Florida’s largest homebuilders.
Miami-based Lennar builds homes in a number of Northeast Florida communities. Bonita Springs-based WCI does not have any Jacksonville area communities, according to its website, with all of its properties located in the southern half of Florida.
WCI markets homes for the “move-up, active adult and second-home buyers.” Lennar said the acquisition expands its presence in the move-up market in coastal Florida communities.