Johnson & Johnson

(JNJ) - Get Report

is holding advanced talks to acquire part of

Inverness Medical Technology

(IMA)

, a company that primarily develops products for treating diabetes.

According to the terms the companies are discussing, J&J would acquire Inverness Medical's diabetes care business. Inverness would split off its women's health, nutritional supplements and clinical diagnostics businesses to form a new publicly traded company owned by Inverness shareholders.

Shareholders of Inverness would receive $35 in Johnson & Johnson common stock, plus common stock in the new company, for each share of Inverness they hold. J&J valued the Inverness diabetes care products business at about $1.3 billion.