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Chattem Buying Kaopectate

It acquires five former Pfizer brands in a J&J divestiture move.
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Chattem

(CHTT)

agreed to acquire the U.S. rights to five leading consumer and over-the-counter brands from

Johnson & Johnson

(JNJ) - Get Johnson & Johnson Report

and

Pfizer

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(PFE) - Get Pfizer Inc. Report

for $410 million in cash.

Chattanooga, Tenn.-based Chattem said it will acquire the Act mouthwash, Unisom sleep aid, Cortizone anti-itch cream, Kaopectate antidiarrhea medicine and Balmex diaper rash lotion.

Johnson & Johnson is selling the brands to satisfy regulatory conditions tied to the $16.6 billion acquisition of Pfizer Consumer Healthcare, which it agreed to acquire in June. That deal is expected to close by year end.

"This acquisition will provide our company enduring brands that mirror our corporate strategy and enhance the level of the company's long-term growth potential," said Chattem CEO Zan Guerry. "Each of these brands has a leadership position within its category, a loyal consumer base and a brand name with staying power. These brands are responsive to advertising and can be extended with new products, which plays perfectly into our proven track record of growing brands through innovation and advertising."

The acquisition will be accretive to Chattem's earnings per share in fiscal 2007 and provides excellent long-term growth opportunities for both sales and earnings.

To fund the transaction, Bank of America has provided a commitment letter for a $425 million term loan facility.