Johnson & Johnson Plans $10 Billion Share Repurchase Program

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J&J Blames Staff Cuts, Pfizer Deal for Tylenol Recall Flood
Daniel Acker/Bloomberg

Johnson & Johnson, the world’s biggest maker of health-care products, said its board approved a plan to buy back as much as $10 billion in shares, double the amount it budgeted last year.

The company will finance the repurchases with debt, New Brunswick, New Jersey-based J&J said in a statement on Tuesday. The repurchase program has no time limit, and J&J had $34 billion in cash, equivalents and short-term investments at the end of June, leaving plenty of room for acquisitions.

J&J has about 2.77 billion shares outstanding. The program would let the company buy back about 3.8 percent of those shares at yesterday’s closing price.

Investors have been waiting to see if the drugmaker makes a large acquisition to bolster its pharmaceutical division, an industry that has been rapidly consolidating as larger players seek out new hot drugs. In March, J&J lost out to AbbVie Inc. when the latter bid $21 billion for Pharmacyclics Inc., J&J’s partner in the development of Imbruvica. The cancer drug is projected to be a blockbuster with sales surpassing $1 billion for J&J as soon as next year.

The drugmaker is scheduled to report third-quarter profit Tuesday morning. Earnings, excluding one-time items, may have reached $1.45 on a per-share basis, according to the average of 18 analysts’ estimates compiled by Bloomberg. J&J has been investing heavily in building up its pharmaceutical business as other products, such as medical devices, face pressure to compete on price to retain customers.

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