Johnson & Johnson is considering selling its wound-care business

Johnson & Johnson is considering selling its wound-care business to a private equity group, One Equity Partners. I don't think Johnson & Johnson's investors should really care one way or another; the unit's $270 million in sales last year made up less than 1% of Johnson & Johnson's revenue. But investors in picking Omrix Biopharmaceuticals should pay very close attention to the deal.
Johnson & Johnson's wound-management division markets all of Omrix's biosurgical products, and the two are also working together to develop a fibrin patch that combines a physical barrier with a biologically active component to stop bleeding.
The health-care conglomerate has until Aug. 22 to decide whether it will accept the offer for an undisclosed amount of money. (You can get away with these types of vague press releases when you're as large as Johnson & Johnson.)
Unsurprisingly, there's not quite enough information in the press releases and 10-Ks to know exactly what will happen, but let's check out the possibilities:

• Johnson & Johnson retains the right to sell Omrix's products, even though it's selling off its wound management business. That doesn't sound like the best option for Omrix, since having the sales reps hocking related wares likely helps move Omrix's own products.
• The partnership transfers to the new owners unchanged. This would be a big unknown for Omrix; One Equity could provide additional support for Omrix's products, but the backing of Johnson & Johnson sure sounds a lot better.
• A change in ownership allows Omrix to break out of the partnership. This could be an advantage to Omrix, if it can get a better deal from another company that sells wound management products, like Kinetic Concepts or Covidien.

Johnson & Johnson hasn't been doing terribly well against ZymoGenetics and King Pharmaceuticals in the battle of the thrombins since Omrix's version came on the market last year. But it has been doing a good job pushing Omrix's Evicel -- its fibrin sealant used to stop surgical bleeding. If J&J does decide to bid Omrix adieu, it'll likely do so with mixed feelings.

Source: Motley Fool