The
information contained in this filing was provided to certain employees of Mentor
Corporation. The attached questions and answers, however, contain a
technical error by stating that employees of Mentor Corporation that do not
decline or object to employment by Ethicon, Inc. will become Ethicon, Inc.
employees effective at the close of the transaction. It is instead
expected that such employees will remain employees of Mentor Corporation, as a
stand-alone business unit reporting through Ethicon, Inc., at the close of the
transaction.
Global
Key Messages
About
the Deal
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Johnson
& Johnson (“J&J”) and Mentor Corporation (“Mentor”), a leading
supplier of medical products for the global aesthetic market, have
announced a definitive agreement whereby Johnson & Johnson will
acquire Mentor. Mentor is expected to operate as a stand-alone business
unit reporting through ETHICON, Inc., a J&J company and leading
provider of suture, mesh and other products for a wide range of surgical
procedures.
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The
acquisition provides J&J with an opportunity to expand and strengthen
its presence in aesthetic and reconstructive
medicine.
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The
acquisition provides Mentor with an opportunity to broaden the scope,
reach and market for its innovative, science-based aesthetic and
reconstructive medicine products.
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Both
parties see this as an opportunity to build a market-leading business that
differentiates itself from the competition by raising the standard for
innovation and patient outcomes in aesthetic
medicine.
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The
acquisition is expected to close in the first quarter of calendar year
2009. At that time Mentor, comprised of approximately 1300 employees, will
become a stand-alone business unit reporting through
ETHICON.
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A
Shared Vision for the Future
By
combining forces, ETHICON and Mentor aspire to be the trusted, global leader in
aesthetic medicine among both consumers and professionals by providing a broad
range of innovative, science and clinical-based solutions to maintain, enhance,
and restore patient self-esteem and quality of life.
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Mentor
will become the cornerstone of a broader J&J leadership strategy in
Aesthetic medicine – across consumers and
professionals.
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This
will result in significant growth and new opportunities for the employees
of both Mentor and ETHICON.
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Understanding
and addressing our customers’ unmet needs through innovation is a hallmark
of Mentor’s and ETHICON’s success. The Mentor sales force will be the face
of ETHICON to plastic surgeons and their
offices.
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Mentor
will have access to ETHICON’s worldwide surgical professional education
platform and resources, to enhance and extend the reach of surgeon
training around the world.
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The
breadth and scope of ETHICON’s worldwide business model will also enable
Mentor to accelerate growth in markets outside the
US.
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Mentor
employees will become part of the world’s broadest healthcare company,
benefiting from the range of leadership and professional development
opportunities afforded to our
employees.
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About
the Companies
Mentor
Corporation
Mentor is
a well-respected, experienced leader in the worldwide market for aesthetic and
reconstructive medical products with a 30+ year legacy of excellence in serving
plastic surgeons successfully and profitably.
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It
has a worldwide market leading position in the market for breast
augmentation and reconstruction procedures, which has potential for strong
growth in the future.
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The
company also has a range of non-animal, synthetic hyaluronic acid-based
dermal filler products on the market and in development. It is developing
a highly-purified botulinum toxin product for cosmetic and therapeutic use
that recently completed the first of three Phase 3 clinical
trials.
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Mentor
employs approximately 1300 people around the world and is headquartered in
Santa Barbara, California, with manufacturing and research operations in
the United States (Dallas, TX; Tucson, AZ; Madison, WI), France, the
Netherlands and Mauritius.
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ETHICON
ETHICON
is recognized worldwide as the gold standard in surgical wound closure – it also
has growth platforms focused on hernia, female pelvic health, biosurgicals, and
plastic surgery. The Company is headquartered in Somerville, NJ, has more than
8,500 employees worldwide and sells products in over 50 countries.
Aesthetic
Medicine Marketplace
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Favorable
long-term macro-economic trends will foster continued growth (despite
current economic challenges) for the overall aesthetic market, including a
worldwide aging population, rise in obesity, and a rising consumer focus
on health, wellness, and self
esteem.
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Aesthetic
medicine is a large and fast growing market. The aesthetic medicine market
is $4.6B market today, and is projected to reach $6.7B by 2012 (10% CAGR).
Breast implants, liposuction devices, neurotoxins and dermal fillers
represent ~40% of the total aesthetic procedures
today.
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ETHICON:
Why Focus on Aesthetics/Acquire Mentor?
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Leveraging
knowledge of surgical procedures, and expertise in synthetic / biologic
platform materials, ETHICON has created technologies and products that
drive its business and serves patients across multiple platforms –
including plastic and reconstructive
surgery.
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ETHICON
has long-standing relationships with plastic surgeons, known to be some of
the most discerning users of suture and wound closure products. They
prefer a high-performing suture that offers excellent cosmesis and minimal
scarring. In recent years, they have become a growing target customer for
ETHICON. Yet, many of their procedures are performed in an out-of-hospital
setting, not a historical call point for the
Company.
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Mentor
has a dedicated and well-respected sales force focused on this important
surgery customer — the entry point being products for breast augmentation
and reconstruction. They possess significant depth and expertise in this
core business, spend more time in the operating room than the competition
and have significant tenure with the
company.
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Mentor
has a proven track record as a technological leader in breast implant
development and manufacturing. Mentor also has an impressive pipeline
including new breast implant products, a neurotoxin, and a portfolio of
dermal filler products.
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Recently,
ETHICON has focused on opportunities associated with body contouring
surgery following massive weight loss (a suture-intensive procedure) and
has launched the innovative PRINEOÔ Skin Closure System in Europe (U.S.
launch anticipated in Q2 2009) to significantly reduce suturing time for
such procedures. The Company is also planning a clinical evaluation in the
first quarter of 2009 of its minimally-invasive face lift (NuvanceÔ), a
novel application based on its mesh
portfolio.
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The
acquisition of Mentor will create an opportunity to develop a
market-leading business that can differentiate itself by enabling plastic
surgeons to better meet their patients’ needs and raising the standard for
innovation and patient outcomes in
aesthetics.
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ETHICON Question &
Answers
1.
What is the strategic rationale for acquiring Mentor?
The
acquisition of Mentor will create an opportunity to develop a market-leading
business that can differentiate itself by raising the standard for innovation
and patient outcomes in aesthetics. Specifically, it represents an opportunity
to:
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Enter
a large, profitable, and historically fast growing
market
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Create
a new growth platform that capitalizes on ETHICON’s broad-based commercial
capabilities, worldwide surgical care footprint, and clinical / scientific
capabilities
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Provide
improved options for patients seeking aesthetic
solutions
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2.
Is breast augmentation a good “fit” for J&J and ETHICON?
At
J&J and ETHICON, we are committed to bringing forth innovative ideas,
products and services to advance the health and well-being of patients. For
some, choosing plastic/reconstructive surgery to enhance the way they look and
feel can have a significant benefit on self-esteem and overall quality of life.
While we are new to the breast implant business, we have served customers with
surgical implants that ranged from permanent sutures to surgical meshes, stents,
and Orthopedic implants. We believe that by combining forces with Mentor, we can
meet the needs of this growing market segment with clinically differentiated and
evidence-based products and services that will ultimately redefine the standard
of care.
3.
Isn’t this really about getting into a direct-pay business?
J&J
regularly reviews and evaluates its strategic options and priorities. We believe
that strengthening our presence in aesthetic medicine continues to diversify our
portfolio and enables the Company to offer exciting prospects for our customers,
patients and employees.
4.
How much of an impact will this transaction have on J&J’s sales in
2009?
Bringing
Mentor into the J&J family of companies will strengthen our growth prospects
in 2009 and beyond. While we do not discuss specific sales numbers, we are
confident about Mentor’s growth prospects in the coming years.
5.
Are there any pending lawsuits involving Mentor breast implant
products?
We don’t
believe the acquisition of Mentor will provide any unusual exposure from current
litigation within their portfolio.
ETHICON — Internal Audience
Questions
1.
How will the new business be structured?
Mentor
will operate as a stand-alone business unit as a part of the global ETHICON
franchise, will keep the Mentor name, and will remain headquartered in Santa
Barbara, California. Currently ETHICON has three business units: ETHICON
Products; Johnson & Johnson Wound Management and ETHICON Women’s Health
& Urology.
2.
Will the plastic surgery business of Endo or Consumer be impacted by this
acquisition?
Mentor
will focus primarily on their current portfolio, with additional new products
coming from the ETHICON plastic surgery pipeline. Customer convergence
opportunities across J&J will be explored through the ETHICON aesthetic
medicine team.
3.
Will Mentor sales reps carry any ETHICON products?
At
closing, Mentor will become a stand-alone business unit of ETHICON. We expect
that during the course of integration, we will evaluate synergies and determine
how Mentor sales reps will work alongside their ETHICON colleagues and what
would make the most sense for our customers.
4.
What is the plan for integration? Will there be transition teams?
A
transition team has been developed with an overall senior transition leader. A
formal announcement about this team will be forthcoming.
5.
What happens to the employees of ETHICON and Mentor? Will any employees lose
their jobs?
We expect
this transaction to create new growth opportunities for Mentor as it transitions
into our worldwide ETHICON franchise. In addition to growth opportunities, we
will also look for synergies that Mentor can leverage from our worldwide
structure. ETHICON recognizes the value of the operational and commercial
expertise of the approximately 1300 employees of Mentor. Substantially,
individuals would be expected to shift with the business. [Note: For country
specific employees impact, consult with local HR/Legal counsel]
Mentor Employee Question
& Answers
Section
I: Why this Deal Now; Why J&J?
Section
II: Mentor Headquarters and Manufacturing
Section
III: Impact on Employees
Section
IV: Impact on the Way Mentor Does Business and Customers
Section
V: International
Section
VI: Other Strategic Questions (Filler, Toxin, Planning)
Section
I: Why this deal now; why J&J?
1.
Why is Mentor agreeing to sell the company now?
Increases our strength:
Joining ETHICON will give Mentor access to the resources that come with being
part of a large company while continuing to operate as an entrepreneurial
company and leader in the global aesthetics marketplace.
Building on our history as the global
leader in aesthetics: Mentor has a 30+ year legacy of providing
innovative products and best-in-class service to surgeons worldwide. This next
stage in the evolution of Mentor as an aesthetics market leader will enable
Mentor to accelerate growth while sustaining our focus on plastic surgeons and
their patients and expanding our offerings to them.
Strong cultural fit: There is
a strong fit between the cultures of Mentor, ETHICON and Johnson & Johnson.
Mentor will continue to operate as a stand-alone, highly entrepreneurial
business unit within ETHICON. Mentor will continue to meet the needs of plastic
surgeons and patients in the aesthetic market worldwide with ongoing product
innovation, science and services that help people improve their appearance,
personal well-being and overall quality of life.
Shared
vision: (see next Q&A)
2.
Why does J&J want to get into the breast implant business?
J&J
is committed to being the trusted global leader in Aesthetic Medicine among both
consumers and professionals by providing a broad range of innovative, science
and clinical-based solutions to maintain, enhance, and restore self-esteem and
quality of life. Being in the breast implant business will help J&J achieve
that vision.
Section
II: Mentor Headquarters and Manufacturing
3.
Will Mentor still be headquartered in Santa Barbara?
Mentor
will operate as an individual business unit of the ETHICON franchise and
maintain its current headquarters in Santa Barbara. Many other J&J business
units headquarters (Animas, Depuy, etc) continue to be located where they were
prior to their acquisition.
4.
Will all Mentor manufacturing plants continue to operate?
Yes.
Operations plays a critical role in supporting business growth. Continuing
support from the Mentor plants will be important to long-term success. Mentor
uses manufacturing techniques and technology which do not currently exist within
ETHICON.
5.
Will any manufacturing jobs be eliminated?
We will
look to development of an overall Mentor integration plan that leverages our
long-term strategy for growth. Consistent with that growth will be a growing
need for operations support.
Section
III: Impact on Employees
6.
Will all Mentor employees become ETHICON employees?
We expect
this transaction to create new growth opportunities for Mentor as it transitions
into the J&J and ETHICON franchise. In addition to growth opportunities, we
will also look for synergies that Mentor can leverage from J&J’s global
structure. ETHICON recognizes the value of the operational and commercial
expertise of Mentor employees. Substantially all such individuals would be
expected to transfer with the business.
7.
Will reporting relationships change?
As a
business unit of ETHICON, Mentor will have representation on the ETHICON Global
Management Board. Reporting relationships within Mentor are not expected to
change in the short term. As the transition progresses, there may be some
instances where new reporting relationships are introduced.
8.
What types of opportunities will be available for Mentor employees when we
become part of J&J?
Developing
leaders is a core function and responsibility for every J&J business unit.
As employees of ETHICON and following the close of the acquisition deal, Mentor
employees will be able to access and apply for J&J opportunities in
operating companies around the world pursuant to J&J’s internal placement
process and policies.
9.
What will happen to my compensation, benefits, stock plans, etc?
Your
compensation, including any planned merit increases or bonuses will remain
unaffected by this transaction in the short term and will continue to be
honored. If and when these plans change in the future, employees will be given
due notice of any changes prior to their implementation.
10.
Will there be any lapse in benefits coverage between separation from Mentor and
start with ETHICON?
No, there
will not be a lapse in medical coverage. ETHICON will provide additional
information via benefit overview meetings which will be scheduled as part of the
transition plan.
11.
What will happen with my Mentor savings plan?
Prior to
deal close, there will be no changes to your existing savings plan. Following
benefits transition, you will have options regarding how to handle your existing
savings plan. These options will be discussed at the time of benefits
transition. As part of its comprehensive benefits plan, J&J maintains a
401(k) savings plan and you will be given the option to roll over your current
401(k) balance from Mentor to ETHICON at the time of benefits
transition.
12.
How long will I remain an employee of Mentor?
At this
point, we cannot give a specific time period. However, we do expect the deal to
close quickly and Mentor employees that don’t decline or object to employment by
ETHICON will become ETHICON employees effective at the close of the
transaction.
13.
What about my year-end compensation or bonus?
Your year
end compensation, including any planned merit increases or bonuses will remain
unaffected by this transaction in the short term and will continue to be
honored. If and when these plans change in the future, employees will be given
due notice of any changes prior to their implementation.
14.
Will J&J provide signing bonuses and retention incentives?
Signing
bonuses or retention incentives may be used on an individual or as needed basis,
however, broad-based incentives of this nature are not generally offered by
J&J.
15.
Does J&J offer a pension?
J&J
offers a comprehensive benefits platform, including a defined benefit pension
plan and a 401(k) with company match. Further information concerning benefits
will be provided at the time of benefits transition, following the close of the
acquisition transaction.
16.
What is it like to be a J&J/ETHICON employee?
Mentor
employees will become part of the world’s broadest base health care company
benefiting from the range of leadership and professional development
opportunities afforded to all of our employees. The company is also regularly
recognized by industry sources including:
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“The
Most Respected Company” in Barron’s magazine online survey and “One of the
Best Places to Work” by the Human Rights
Campaign
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Acknowledged
by DiversityInc magazine as one of
the “2008 DiversityInc Top 50
Companies for Diversity”
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Working Mother magazine has named
J&J one of the “Top 100 Companies for Working Mothers” every year
since the list was initiated 21 years
ago
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17.
Do I have an option NOT to join ETHICON?
ETHICON
intends to make offers of comparable employment to all Mentor associates in the
US, and the employment arrangements of Mentor associates in the EU will be
transferred to ETHICON. Each employee’s situation must be looked at on an
individual basis.
18.
If I decide not to join ETHICON, will I receive severance from
Mentor?
In
general, if you receive an offer from ETHICON that does not require significant
relocation and you decline, you will be considered as a voluntary resignation
and will not be eligible to receive severance. If you receive an offer that does
require significant relocation and you decline, you will be eligible to receive
severance.
Section
IV: Impact on the Way Mentor Does Business and Our Customers
19.
What influence will ETHICON have in decision making about our
business?
Consistent
with the ETHICON decentralized structure, business units are responsible for
setting strategy, resourcing, and decision making to meet their short term and
long term objectives.
20.
How will customers and other key stakeholders be notified of this
transaction?
All
customers will receive a letter from Josh Levine informing them of the
transaction, as will our investigators, distributors, key society leadership and
vendors/suppliers. These letters are being mailed out this week. Sales
management will also be provided talking points and communications materials. In
the meanwhile, it will be business as usual for Mentor and ETHICON customers in
the marketplace.
21.
What should I tell my customers if they want to purchase new products, need
service on their existing products or want to return a product?
For now
through the closing, it’s business as usual. Customers should continue to order
product from Mentor and contact their Mentor sales representative for service
needs.
22.
How can we minimize the risk of losing customers and managing their concerns
about this transaction?
We can
each emphasize it is business as usual and the advantages of this transaction to
the range of products and services Mentor will be able to provide plastic
surgeons with on a long term basis, while still operating as an entrepreneurial
company focused on meeting physician and patient needs.
23.
When do you expect the deal to close?
We expect
the deal to close in the first quarter of calendar year 2009.
24.
What do you need me to do between signing and closing?
We need
you to continue to stay focused on your customers and the Mentor business. It’s
business as usual.
Section
V. International
25.
What will the integration plan look like? For US? For International? For
distributor business?
Integration
planning is under way and will be guided by the reality that J&J is
acquiring Mentor for its expertise in the plastic surgery marketplace. Toward
this end the priority will be to grow the global aesthetic business with Mentor
and ETHICON products utilizing all relevant expertise across companies within
ETHICON. Our distribution business will be evaluated on a country by country
basis; in the meantime it will be business as usual with continued focus on
meeting customer needs.
26.
How will OUS Branches be impacted by this transaction?
The
expertise within plastic surgery that Mentor branch teams have developed over
the last 15 years will be utilized to the fullest extent possible.
27.
How will this impact other non-product groups the branches are selling, e.g.
Microaire, IS Clinical, L’Estetic etc?
The focus
will be on growing profitable businesses. Any overlap of products will be
evaluated on an individual basis and the best decision made for our customers
and our business.
Section
VI. Other Strategic Questions
28.
How will this transaction impact our filler strategy?
We expect
this new relationship with ETHICON will clarify our filler strategy going
forward. The new combined company will evaluate how to optimize the potential
synergies from our complementary assets.
29.
How will this transaction impact our toxin strategy?
We expect
no impact on our toxin strategy at this time other than having access to
additional technical resources from the much larger ETHICON
organization.
30.
How will this impact the planning process?
As part
of the transition plan, we will assess planning needs on both sides and
determine the best way forward to integrate Mentor into ETHICON in terms of
fiscal and strategic planning.
Notice
to Investors:
The
tender offer for the outstanding shares of common stock of Mentor Corporation
(“Mentor”) has not yet commenced. No statement in this announcement is an offer
to purchase or a solicitation of an offer to sell securities. At the time the
tender offer is commenced, Johnson & Johnson will file a tender offer
statement on Schedule TO with the U.S. Securities and Exchange Commission, and
Mentor will file a solicitation/recommendation statement on Schedule 14D-9 with
respect to the tender offer. Investors and Mentor stockholders are strongly
advised to read the tender offer statement (including an offer to purchase,
letter of transmittal and related tender offer documents) and the related
solicitation/recommendation statement on Schedule 14D-9 because they will
contain important information. These documents will be available at no charge on
the SEC’s website at www.sec.gov. In
addition, a copy of the offer to purchase, letter of transmittal and certain
other related tender offer documents (once they become available) may be
obtained free of charge by directing a request to Johnson & Johnson at www.jnj.com, or
Johnson & Johnson, One Johnson & Johnson Plaza, New Brunswick, NJ 08933,
Attn: Corporate Secretary’s Office.
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