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

Mentor has 19 employees in Madison.

Analysts said J&J is 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 business, a top provider of sutures, mesh and other surgical products.

"For Mentor, what a payday," said Erik Gordon, associate dean and head of biomedical industry programs at Stevens Institute of Technology.

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

"It's a good space for J&J to get bigger in because it's a space with the least cost-control pricing pressures," as patients, rather than insurers or government health programs, generally pay for cosmetic surgery, Gordon said.

Johnson & Johnson doesn't have a cosmetic surgery franchise per se, but this summer it launched a collagen-based skin filler called Evolence. Some products made by Ethicon increasingly are being used in plastic surgery, including sutures, mesh implants for face lifts, and harmonic scalpels, J&J spokesman Bill Price said.

"Mentor's going to become sort of a cornerstone for ... our strategy to become a major player in this area," he said.

Santa Barbara, Calif.-based Mentor has about 1,300 employees and had $373 million in 2007 sales.

The deal is expected to shave 3 to 5 cents per share off of J&J's 2009 earnings. Both companies' boards of directors have approved the deal, expected to be completed during the first quarter.

Mentor's chief executive, Josh Levine, will stay on as a member of Ethicon's global management board, Price said. Significant layoffs are not expected.

Analyst Sean Lavin of Lazard Capital Markets wrote that Johnson & Johnson "is purchasing Mentor at an optimal time, as the stock was down nearly 60 percent year to date."

Mentor's key competitor in the breast implant market is Allergan, the Irvine, Calif.-based maker of Botox. Mentor is developing its own antiwrinkle injection and dermal fillers to compete.

The Mentor deal is the second buyout in as many weeks for cash-rich J&J, which on Nov. 24 bought biotech company Omrix Biopharmaceuticals for $438 million. The deal, expected to be completed late this month, will add products used to control bleeding during surgical procedures.

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