Johnson & Johnson (NYSE: JNJ ) is continuing on its Buffett-like way. Emulating Berkshire Hathaway's (NYSE: BRK-A ) (NYSE: BRK-B ) purchase of Burlington Northern -- first invest in the company, then buy the whole darn thing -- Johnson & Johnson announced today it's in talks to purchase vaccine maker Crucell (Nasdaq: CRXL ) .
The health-care conglomerate already owns about 18% of Crucell through an equity investment and drug development deal. If the full buyout goes through -- there are still details to be worked out -- the purchase price could be in the $2.3 billion range.
That's a fairly large purchase for Johnson & Johnson, but I like the addition of vaccines to the conglomerate's mix of offerings. Once a vaccine becomes an established player in doctors' medical bags, it's really hard to unseat it. One of the best products to come out of Pfizer's (NYSE: PFE ) purchase of Wyeth was its pneumococcal-bacteria vaccine Prevnar and the followup, Prevnar 13.
Except for garnering a piece of the arbitrage money, it might be a little late to jump into Crucell; I doubt you'll see another company start a bidding war with Johnson & Johnson. Being a major shareholder in Crucell, J&J is well-positioned to know the true value of the company, and some drugmakers might be off the table from bidding anyway. Crucell developed childhood vaccine Quinvaxem with Novartis (NYSE: NVS ) , which Crucell could lose through a change-in-control clause should it be acquired by certain pharmaceutical competitors.
Plus it's not like pharmaceutical companies have been itching to pick up vaccine assets. Abbott Labs (NYSE: ABT ) put the vaccine business that it got in the acquisition of Solvay up for sale, but didn't receive bids high enough to justify letting it go.
That might be a sign that Johnson & Johnson is overpaying, but like investors in Berkshire, Johnson & Johnson's investors will just have to trust that management can deploy capital in a successful manner.
James Early has more on Johnson & Johnson, as it is today's "11 O'Clock Stock" buy opportunity.