Kimberly-Clark board adds Kellogg CEO
 
Kimberly-Clark, whose brands include Kotex, Huggies and Kleenex, has elected James Jenness, chairman and chief executive officer of Kellogg Co., to its board of directors effective Feb. 1.

Jenness has been chairman and chief executive officer of Kellogg since 2005. He joined the company from Integrated Merchandising Systems, a retail promotion and merchandising company, where he served as chief executive officer from 1997 to 2004. Before that, he served as vice chairman and chief operating officer of Leo Burnett Co., where he held account management positions of increasing responsibility over the course of a 22-year career.

He began his career as a market analyst with International Harvester Co. and also served as product manager with Alberto-Culver.

Alberto-Culver announced that it has completed the separation of its consumer products business and its beauty supply distribution business.

Abbott to Buy Kos Pharmaceuticals for $3.7 Billion

Abbott Laboratories, the maker of heart drugs, stents and nutritional supplements, agreed to buy Kos Pharmaceuticals Inc. for $3.7 billion, adding to its cholesterol treatments.

Abbott will pay $78 for each Kos share, 56 percent more than the Nov. 3 closing price, the Abbott Park, Illinois-based company said today in a statement. Billionaire founder Michael Jaharis and his family control Cranbury, New Jersey-based Kos, and a majority of holders agreed to the buyout, Abbott said.

The deal will give Abbott the most powerful drug available for elevating good, or HDL, cholesterol and expand its presence in the $20 billion-a-year market for cholesterol pills. Good cholesterol helps ferry bad out of the body. Kos's Niaspan, a version of the vitamin niacin, is part of what some doctors and investors say is the next wave of heart drugs.

``It gains Abbott critical mass'' in the cholesterol market, said Bruce Cranna, an analyst with Leerink Swann & Co. in Boston, in a telephone interview. ``They already have a small toehold with a drug called Tricor, to reduce triglycerides. This allows them to compete to a greater extent.''

Shares of Kos jumped $26.97, or 54 percent, to $77.06 at 4 p.m. New York time in Nasdaq Stock Market composite trading. The stock had lost 18 percent in the 12 months through Nov. 3. Abbott shares fell 17 cents to $47.47 in New York Stock Exchange composite trading.

Debt Ratings                                                                            

Standard & Poor's affirmed its AA investment grade rating on Abbott's debt. Fitch Ratings placed Abbott on ``rating watch negative,'' anticipating a one-notch downgrade when the transaction is completed. Fitch said Abbott's capital structure is already stretched by the debt it took on to buy the vascular business of Guidant Corp. for $4.1 billion in April. It rates Abbott debt AA-.

At 3.7 times estimated 2007 revenues and 30 times estimated 2007 earnings per share, ``the deal is not exactly cheap,'' said Michael Weinstein, a JPMorgan Securities analyst, in a note to investors. ``The longer-term merits of the transaction hinge on Abbott's ability to extend Kos's Niaspan business.''

Pharmaceutical Salesman

Chairman Emeritus Jaharis and his family held 24.5 million shares, or 52 percent, of Kos, according the company's March 2006 proxy statement. Jaharis was 77, the filing said.

A former pharmaceutical salesman, Jaharis and a partner acquired Key Pharmaceuticals Inc. in the early 1970s and sold it to Schering-Plough Corp. in 1986 for $836 million. Jaharis and his management team started Kos two years later. Jaharis ranked 207 on Forbes Magazine's list of the 400 richest Americans in 2005 with a net worth of $1.5 billion.

Kos has a ``growing presence'' in the market for drugs to manage cholesterol, Abbott said. CEO Miles White's purchase of Guidant's heart-stent business got the company into the $6 billion-a-year market for devices to prop open diseased blood vessels.

Heart disease is the leading cause of death worldwide and in the U.S., where it kills 654,000 people a year, according to the Centers for Disease Control and Prevention.

The purchase will give a ``significant'' boost to Abbott earnings after 2008 and will reduce profit by 2 to 3 cents a share in fiscal 2007, Abbott said.

Humira Acquisition

Kos is Abbott's largest purchase of a drugmaker since the $7.8 billion acquisition in 2001 of Knoll Pharmaceuticals from BASF AG, the German chemical company. The Knoll transaction brought Abbott the anti-inflammatory drug Humira, its largest- selling product, with almost $2 billion in sales this year.

Niaspan is an extended-release version of niacin, a B vitamin that is necessary for growth and health. While the naturally occurring substance elevates good cholesterol, taking it in therapeutic amounts for that purposes raises the risk of liver damage, ulcers and skin rashes.

Even Kos's special formulation can cause facial flushing, an uncomfortable and prominent reaction that leads many patients to stop taking it. The company is developing another version designed to limit the flushing side effect.

Sales of Niaspan have benefited from recent studies showing that raising good cholesterol can reduce heart risk. Revenue from Niaspan rose 24 percent to $131 million in the second quarter. Merck & Co. and Pfizer Inc. have suffered recent setbacks on experimental competing products.

Kos is developing a combination of Niaspan with simvastatin, a generic version of Merck's Zocor, that may prove even more potent. It plans to submit the pill, called Simcor, for U.S. regulatory approval early next year, said Abbott spokeswoman Melissa Brotz in a telephone interview.

AIDS, Infections

The U.S. National Institutes of Health is funding a study to see whether Niaspan with simvastatin is better than simvastatin alone in preventing heart attacks and strokes. The results of the study aren't expected until 2010.

Most of Abbott's drugs treat diseases such as AIDS, epilepsy, rheumatoid arthritis and severe infections. Its Tricor medicine cuts levels of bad and total cholesterol while increasing good cholesterol. The drug isn't as potent as treatments such as Niaspan or Pfizer's Lipitor and Zocor, and studies presented last year raised questions about how well it prevented heart attacks and deaths.

Abbott sold $722 million of Tricor in the U.S. in the first nine months this year, making it the company's fourth-largest- selling drug. Abbott licenses U.S. rights to Tricor from Solvay SA, the Belgian pharmaceutical maker.

CVS, Caremark Unite to Create Drug-Sale Giant

In a tacit acknowledgment of the changing ways in which Americans get their prescription medications, drugstore chain CVS Corp. agreed to purchase pharmacy-benefits manager Caremark Rx Inc. for $21 billion, in a deal that will create a behemoth controlling the dispensing of one billion prescriptions a year -- more than a quarter of the U.S. total.

The combined company would have $75 billion in annual revenue, far higher than any competitor in drug retailing or the business of administering prescription health-insurance benefits for employers.

Caremark CEO Mac Crawford and CVS CEO Thomas Ryan discuss their recent merger, why the deal makes sense and the impact Wal-Mart's generic-pricing program is having on the playing field.

The companies promised the combination would lead to new services and efficiencies that would lower drug prices and improve returns to shareholders. Skeptics said that the deal represented a reduction in competition that would lead to higher prices at a time of continuing concern over rising health-care costs. And the stocks of both companies dropped yesterday.

The deal is expected to get a tough review by the Federal Trade Commission, and could face forced changes or divestitures if the agency finds antitrust problems. An FTC spokeswoman declined to comment.

Analysts said the deal could lead to further consolidation among drug retailers and pharmacy-benefit managers. The so-called PBMs have placed pressure on drugstores by negotiating for lower prices on behalf of their clients and via mail-order plans that compete for prescription business.

CVS, which already owns a smaller PBM, has vied in recent years with Walgreen Co. for the No. 1 spot in drug retailing with Walgreen leading in sales and CVS in number of stores. And Caremark has run neck-and-neck with Medco Health Solutions Inc. The combined company could realize strategic benefits over both its archrivals. CVS and Caremark said they would gain $400 million in "operating synergies" -- increased purchasing power and cost savings -- via the deal. CVS could also use its retailing leverage to run promotions on items like beauty aids at its 6,200 outlets to attract new PBM clients. Conversely, Caremark has tens of millions of members, translating into a potential windfall of new foot traffic to CVS stores.

"What Caremark gets is access to a new approach" to pharmacy benefits, said David Veal, an analyst at Morgan Stanley. He cited CVS's recent deal with car maker DaimlerChrysler. CVS's small PBM, PharmaCare, won the car maker's business in part by offering 20% discounts to DaimlerChrysler employees on CVS private-label products in its stores.

With an increasing number of Americans opting for mail-order prescriptions, which have been pushed by companies like Caremark, the acquisition gives CVS a stronger position than its drugstore rivals. Mail-order prescriptions have been highly profitable for the PBMs since they can dispense prescriptions more cheaply from highly automated mail facilities.

In recent years, PBMs have convinced many employers, like General Motors Corp. and International Business Machines Corp., to implement "mandatory mail" programs, which have forced millions of customers to get their medicines in the mail rather than in retail stores. Although the growth rate of mail order has slowed recently, it still outpaces that of the retail drug sector. According to IMS Health, a health-information service, about $36.9 billion of prescription drugs were bought through the mail in 2005, a 7% increase from 2004. For drugstore chains, which had a bigger share of the market at $88.2 billion in sales, the sales increase was 5%.

By combining with the big benefits manager, CVS reaps the benefit no matter if a customer goes to one of its drugstores or opts to fill the prescription via mail. "If you are CVS and can own one of the biggest mail-order operations in the business, you become more agnostic on where the prescription can be filled," said John Ransom, an analyst with Raymond James.

What the deal means for consumers is less clear, with some warning the merger of the companies might result in higher drug prices or co-pays. "If CVS is getting into this because they think they can increase their profits by acquiring and controlling the PBM, it might be very good for CVS, but it's hard to imagine how it is good for the public," said Sidney Wolf, the director of the health research group at Public Citizen, a Washington nonprofit group often critical of the drug industry. "There is no evidence this kind of thing passes money onto patients."

PBMs are not strangers to charges of conflicts of interest. Medco, Caremark's biggest rival, was owned by Merck & Co., until 2003. As a result, Merck drugs had a higher market share of users among Medco members than among other patients, even when there were less-expensive alternatives available.

Employer customers of Caremark "should be nervous and need to ask some questions," said Keith Bruhnsen, assistant director at the benefits office of the University of Michigan, a former client of Caremark's. "They're going to have to examine whether this is going to create some conflicts of interest."

Concerns about conflicts of interest or higher prices were dismissed by CVS Chief Executive Thomas Ryan and Caremark Chief Executive Edwin M. "Mac" Crawford during a joint interview. "Our job is to get the best price and stay competitive," Mr. Crawford said. "There is no way we can suddenly charge more money and not be competitive in the marketplace."

CVS's interest in the pharmacy-benefits management business isn't new. The company bumped up the size of PharmaCare in 2004 when it acquired the PBM business of Eckerd drugstores as part of an acquisition that included the purchase of about 1,000 Eckerd stores, mainly in Florida and Texas. PharmaCare reported revenue of $3 billion last year, making it the fourth-largest benefits manager in the country, according to CVS.

The companies said it would take six months to a year to close the deal, under which Caremark holders would get 1.67 CVS shares for each Caremark share. Billed as a "merger of equals," the company, to be called CVS/Caremark, will be based in Woonsocket, R.I., where CVS is located. Its PBM business would be located in Nashville, Tenn., where Caremark has its headquarters. Mr. Crawford will be chairman; Mr. Ryan will be the chief executive. The board will be split equally between Caremark and CVS representatives.

Investors reacted harshly to the deal, largely because CVS was offering only a narrow premium of about $3 a share, using Monday's closing prices of the stocks. Yesterday, CVS shares closed down $2.32, or 7.4%, to $29.06 as of 4 p.m. in New York Stock Exchange composite trading. Based on that price, the deal would be valued at $20.9 billion. Caremark shares were down $1.46, or 2%, to $48.17 in Big Board trading.

Drugstore and PBM stocks have been under pressure. Both sectors declined after Wal-Mart Stores Inc. said in September that it would charge $4 for a 30-day prescription of certain generic drugs at stores in the Tampa, Fla. area. Wal-Mart quickly expanded that program to stores in 27 states.

Another factor pressing on PBMs and retailers recently has been a looming cut in branded-drug list prices, prompted by industry litigation. The list prices are used as benchmarks for reimbursing PBMs and drugstores and the potential reduction is expected by some analysts to lower their revenues and profits.

Mr. Ryan said the actions of Wal-Mart "were never part of the equation" in merging with Caremark.

CVS competitor Walgreen already operates a PBM, called Walgreens Health Initiatives. However, in August it lost its major corporate client: Ovations, the senior health-care unit of UnitedHealth Group Inc. Walgreen had been handling Medicare Part D prescriptions for Ovations, but UnitedHealth decided to bring the processing in-house.

Michael Polzin, a Walgreen spokesman, said the company plans to grow its PBM business, but he wouldn't address whether it will make any acquisitions.

Icahn Wins Control of ImClone Systems and Company’s Chief Leaves

Carl C. Icahn won control of the cancer drug developer ImClone Systems yesterday after an intense proxy battle. He vowed to recruit an experienced chief executive to run the company and to increase sales of Erbitux, the company’s only product.

Mr. Icahn, who owns 14 percent of ImClone and joined its board last month, was named chairman of the company, which is based in New York. Joseph L. Fischer, the company’s interim chief executive and a target of Mr. Icahn’s criticism, has resigned his executive position and his seat on the board, the company said yesterday.

The actions followed a board meeting Tuesday at which three other directors opposed by Mr. Icahn agreed not to stand for re-election at the company’s next annual meeting in next year’s first quarter. In exchange, Mr. Icahn dropped his effort to persuade shareholders to oust the directors.

An executive committee of three directors allied with Mr. Icahn will run the company until a new chief executive is chosen.

“This is the beginning of a new ImClone, one that will be defined by decisiveness, execution and accountability,” Alexander J. Denner, a board member who works for Mr. Icahn and who will lead the new executive committee, said in a conference call with analysts yesterday.

ImClone’s shares rose $1.56, or 5 percent, to close at $31. That is still well below its 52-week high of more than $43, in mid-May.

Other than saying his priority would be to find a new chief executive with ample biotechnology experience, Mr. Denner was vague on what else the company would do. He did say the board was not interested in selling ImClone.

Some analysts said there was probably little Mr. Icahn and his team could do in the short run, given that it takes years to develop and test new drugs.

Erbitux, which had United States sales of $174.6 million in the third quarter, is facing new competition from Vectibix, a very similar drug from Amgen that was approved at the end of September.

Vectibix, at $8,000 a month, is about 20 percent less expensive than Erbitux, can be given less frequently and, in the view of some analysts, is safer. ImClone is developing several other cancer drugs but they are in early stages of clinical trials.

“Unfortunately, I do think he’s inheriting a sinking ship,” Eric Schmidt, an analyst at Cowen & Company, said of Mr. Icahn. “In biotech, it is all about the drug. Neither Carl nor anyone else can go in the lab and improve ImClone’s prospects” in the short term.

Still, it appears Mr. Icahn and his team intend to persuade Bristol-Myers Squibb, which sells Erbitux in the United States, to put more of a marketing effort behind the drug. In a statement that seemed to reflect dissatisfaction with Bristol’s efforts, Mr. Icahn said the relationship between ImClone and Bristol had “seriously deteriorated over the past few years.”

Bristol-Myers said in a statement: “We have made and continue to make significant investments in the commercialization and development of Erbitux.” It would not comment further.

Bristol, which owns 17 percent of ImClone, bought the North American rights to Erbitux in 2001 for about $2 billion, in what is still the largest product licensing deal ever in the biotechnology industry.

Mr. Icahn has amassed a fortune estimated by Forbes magazine at $9.7 billion by taking positions in companies and agitating for change. He does not always succeed, however. Earlier this year he gave up an attempt to force Time Warner to split into four companies. And shares of Blockbuster, the video rental company, continued to decline after Mr. Icahn and his allies won seats on the board last year.

Mr. Icahn has little experience in biotechnology. Mr. Denner, however, said he himself has a doctorate in biomedical engineering and has managed some health-care-oriented investment funds.

The agreement of the three directors not to stand for re-election will remove the last of the board members remaining from before scandal rocked the company in 2002, with the exception of Bristol-Myers’s representative, Andrew G. Bodnar.

Samuel D. Waksal, ImClone’s co-founder and then chief executive, is now serving a seven-year prison sentence for insider trading and other crimes after he tipped family members to sell stock in December 2001 before the company announced a big regulatory setback. Mr. Waksal’s friend Martha Stewart also served a short sentence linked to her sales of ImClone shares.

Since Mr. Waksal left in 2002, ImClone has gone through a series of chief executives. Mr. Fischer, a consumer products executive who had been on ImClone’s board since 2003, became interim chief executive in January. He will get a $650,000 severance payment.

Mr. Icahn had criticized the board for not having recruited an experienced chief executive and for not doing clinical trials quickly enough aimed at expanding the uses of Erbitux beyond its initial approval for colorectal cancer. The drug has since been approved as a treatment for head and neck cancer.

In September, Mr. Icahn and three allies were elected to the board, but he failed in a bid to be elected chairman. The former chairman subsequently resigned and resistance to Mr. Icahn seemed to crumble.

The $174.6 million third-quarter sales for Erbitux that ImClone reported yesterday as part of its quarterly financial report, were up from $107 million in the comparable quarter a year earlier. But the drug’s sales barely increased from the second quarter of this year.

The company reported a profit for the quarter of $57.3 million, or 65 cents a share.

Mr. Icahn, despite knowing little about biotechnology, has long been an investor in ImClone because of his friendship with Mr. Waksal.

Mr. Icahn said in an interview yesterday that in the mid-1990’s, when ImClone needed money, he bought two million shares at $2 a share and sold after the price rose to around $130, before a split. He said he got out of the stock before the deal with Bristol-Myers was announced, and therefore before the crash that occurred after the scandal erupted.

He said that after the stock price plummeted he began buying more. Most of what he owns now, he said, was acquired when ImClone shares were selling below $20.

“I hope I get lucky with it again,” he said. But he added, “This time, to get lucky, there has to be some activism.”

Kellogg Names Mackay CEO, Replacing Jenness

Kellogg Co. Monday promoted President and Chief Operating Officer David Mackay to Chief Executive, replacing Jim Jenness, who will continue to serve as chairman and a director at the cereal maker.

Mackay, 51 years old, will succeed former advertising man Jenness - CEO for just two years - on Dec. 31. No reason was given by the Battle Creek, Mich., food company for the change.

Kellogg said it wouldn't fill the roles of president and chief operating officer when Mackay moves up. Those were new positions awarded him in 2003 when he was promoted from executive vice-president and president of Kellogg USA. He joined Kellogg in Australia in 1985.

Jenness, 60, succeeded Carlos Gutierrez, who left Kellogg to join the Bush administration as Commerce secretary. The appointment of Jenness, a Kellogg board member and former marketing executive, surprised some investors, who had expected Mackay might be named as Gutierrez's successor.

"Apparently they felt he (Mackay) needed a little more seasoning," food industry analyst John McMillin of Prudential Financial said. "Gutierrez left kind of quickly, but sometimes when the team is winning you don't want to change the line-up," he added.

But McMillin said he was once again surprised by the timing of Monday's succession disclosure. "This was an announcement I expected about a year or so from now."

Mackay - an Australian who pronounces his name Ma-KEYE - is widely credited with envisioning and implementing Kellogg's "volume to value" strategy which emphasized value-added, high-margin products rather than simply selling more corn flakes than competitors.

Shares of Kellogg were recently priced at $49.73, up 34 cents, or 0.7%, with 574,500 shares traded on the New York Stock Exchange. The average daily volume is 1.2 million.

Analysts applauded Mackay's promotion.

"David Mackay is very well liked by the investment company and loved internally," said Timothy Ramey at D.A. Davidson & Co.

Ramey said he was among those who thought Mackay would have succeeded Gutierrez two years ago, partly because Jenness "was an unknown quantity to me."

The analyst said he also was concerned that Mackay might become frustrated and leave Kellogg for another offer. "The risk was that he wouldn't stick around to see how it (the strategy) played out."

A.G. Edwards & Sons analyst Christopher R. Growe said that retaining two key executives - international president John Bryant and North America chieftain Jeff Montie - "will be important factors in maintaining the momentum" at Kellogg. Anticipating a "relatively smooth transition," Growe said he doubts that the incoming CEO will make any material management changes near-term.

Growe has a buy rating on the stock, as does Ramey. McMillin of Prudential rates Kellogg overweight.

None of the analysts owns shares of Kellogg, but A.G. Edwards received non-investment banking compensation from Kellogg within the past 12 months.

Letters to Mackay and Jenness, filed by Kellogg with the Securities and Exchange Commission Monday in connection with the announcement, showed that Mackay will be paid a $1.1 million base salary and is eligible for a long-term incentive program target award of $6 million for next year.

Kellogg's letter to Jenness disclosed that the chairman has decided "not to receive the compensation commensurate with the role" of chairman, "despite the time and effort required to fulfill the responsibilities" of that job.

No explanation of that decision was given other than that it was the executive's. The letter did allude to his "affection for and commitment to Kellogg Co. and its shareholders."

Before being named CEO in 2004, Jenness had been chief operating officer at Kellogg's long-time advertising agency, Leo Burnett Co., where one of his first assignments, in 1974, was to work on the Special K cereal account.

Candy and chewing-gum maker Wm. Wrigley Jr. Co. named outsider William D. Perez as president and chief executive, succeeding Bill Wrigley, Jr., who will remain chairman -- marking a major shift for the company.

The move marks the first time in the company's 114-year history that a nonfamily member was appointed to lead the company, which makes Hubba Bubba gum, Altoids mints and Life Savers candies in addition to its namesake Wrigley gums.

In midmorning trading, shares of Wrigley were up $6.66, or 14%, at $53.49 on the New York Stock Exchange.

Mr. Perez, 59 years old, spent 34 years with SC Johnson, including eight years as president and chief executive of the closely held consumer-products company. In 2004, he joined Nike Inc., where he briefly served as chief executive officer until earlier this year amid disagreements with the company and its founder, Philip H. Knight.

"The appointment of Bill Perez to be the first person to serve as president and CEO … from outside the family is indeed an historic and important milestone for our company," said Bill Wrigley, Jr., in a statement.

The company has seen its stock slump this year. The problem, in large measure, stems from Bill Wrigley Jr.'s big bet on something other than gum. Last year, the company shelled out more than $1.4 billion to buy Life Savers, Altoids and other related businesses from Kraft Foods Inc. Like Kraft, General Mills Inc. and other food companies that went on buying sprees in the late 1990s, Wrigley is finding it isn't so easy to buy your way to higher profit.

Wrigley has long been known for its conservative ways. Until 1998, the only product it sold in the U.S. was stick gum. And when it comes to gum, Wrigley has been tremendously successful, accounting for some 63% of the U.S. market with brands that include Wrigley Doublemint, Big Red and Juicy Fruit.

But after Mr. Wrigley took control of the company following his father's death in 1999, he began looking for ways to diversify. Wrigley had an agreement with Hershey Co. to purchase the chocolate maker for $12.5 billion back in 2002, but the deal was scuttled at the last minute when Hershey's controlling trust voted against it.

Separately, Wm. Wrigley reported Monday its net income rose 14% to $148 million, or 53 cents a share, in the third quarter, from $129.7 million, or 46 cents a share, in the year-earlier period. Sales rose 11% to $1.18 billion from $1.06 billion. The results included a restructuring charge of two cents a share. On a non-GAAP basis, earnings per share increased to 57 cents a share from 47 cents a share.

Chattem to buy 5 J&J, Pfizer brands, shares soar

Chattem Inc. on Friday said it plans to pay $410 million for the U.S. rights to five brands, including anti-diarrhea drug Kaopectate, from Johnson & Johnson and Pfizer Inc. as the drug makers try to satisfy regulatory requirements for their own looming deal.

Shares of Chattem, a small consumer products maker with brands like Gold Bond, soared 26 percent in early trading.

Brean Murray analyst Gary Giblen said the deal was "a positive surprise" for Chattem, since no divestiture opportunities had been expected from J&J's acquisition of Pfizer's consumer health-care business.

The deal comes a day after Chattem shares fell 3.9 percent amid concerns that the company's Selsun Blue dandruff shampoo may be pressured by a new competing line from consumer products powerhouse Procter & Gamble Co.

Giblen raised his rating on Chattem to "buy" from "hold." He called concerns about P&G's new Head & Shoulders Intensive Solutions dandruff shampoos "flaky."

Chattem said the brands it plans to buy have combined annual revenue of $115 million. In fiscal 2005, Chattem's total revenue was $279.3 million.

J&J announced plans to buy Pfizer's consumer health-care business for $16.6 billion back in June, giving it well-known brands like Listerine. But J&J's portfolio already included brands like Act fluoride mouth rinse, one of the brands Chattem will buy.

Chattem said its agreement was subject to regulatory review and certain closing conditions, including the completion of J&J's purchase of the Pfizer business, expected by year-end.

Other brands Chattem plans to buy are sleep aid Unisom, anti-itch salve Cortizone and Balmex diaper rash treatment.

Act and Balmex are J&J brands, and Cortizone, Kaopectate and Unisom are owned by Pfizer. Chattem said the brands were being divested in connection with the J&J-Pfizer deal and certain regulatory requirements related to that acquisition. It did not comment on why these specific brands were being divested.

Chattanooga, Tennessee-based Chattem said the deal will add to its earnings in fiscal 2007.

SunTrust Robinson Humphrey lowered its earnings and revenue targets for Chattem on Thursday, citing increased competition from P&G's new medicated Head & Shoulders line.

SunTrust's Bill Chappell maintained his "neutral" rating on Chattem and said the shares may have a "psychological overhang" now that the company competes directly against P&G in two of Chattem's major categories. Besides going head to head in dandruff shampoo, Chattem's Icy Hot brand topical pain relief brand battles P&G's ThermaCare.

Shares of Chattem, which is expected to report quarterly results on October 10, jumped as high as $43.37 in early Nasdaq trading, their best level since August 2005. They were last up $6.05, or 17.6 percent, at $40.48. Through Thursday, the shares had fallen 5.4 percent this year.

J&J and Pfizer shares were down less than 1 percent.

Carolina Turkey gobbles up Butterball for $325M

 

International turkey processor Carolina Turkey has finalized a $325 million acquisition of Butterball turkey from ConAgra Foods.

 

The transaction makes Carolina Turkey the largest turkey producer in the United States.

 

The expanded company expects production to reach 1.4 billion pounds of turkey in 2006, or 20 percent of total turkey production in the United States.

 

Located southeast of Raleigh in Mt. Olive on the Wayne and Duplin county line, Carolina Turkey is a joint venture of Maxwell Farms Inc., an affiliate of the Goldsboro Milling Co., and Virginia-based Smithfield Foods. Smithfield Foods  employs more than 5,000 workers at its Tar Heel slaughterhouse in southeastern North Carolina.

 

Carolina Turkey will gain more than 3,200 employees and five processing plants in Arkansas, Missouri and Colorado. Butterball President and Chief Executive Keith Shoemaker said the company does not expect any layoffs as a result of the merger.

 

ConAgra Foods Inc. currently employs more than 650 workers at a facility in Garner.

Procter sells Sure deodorant line

Procter & Gamble sold its Sure deodorant line Tuesday, saying the 33-year-old brand no longer fits its strategy of focusing on products with a global reach.

Innovative Brands LLC, established by Phoenix-based private equity firm Najafi Companies, is buying the line as part of its plan to acquire and build consumer brands that larger corporations no longer want. Terms of the sale weren't released.

Innovative also bought P&G's Pert Plus shampoo brand for an undisclosed sum in July.

Michelle Syznal, a P&G communications director, said Sure is the No. 1 unscented deodorant brand, but that it's marketed for use by males and females while the consumer products company wants to make gender-specific appeals with its deodorants.

She said Sure has about 3 percent of the $2.4 billion U.S. market for deodorants and antiperspirants. P&G's Secret is the No. 1 brand for women and Old Spice leads sales for men, each with double-digit shares in the market, Syznal said. P&G also offers the Gillette deodorant series for men.