Kendall Acquires Sherwood-Davis & Geck

American Home's divestiture of its device business points up the different assumptions drug and device companies make about their businesses: the former value individual blockbusters in their pipelines; the latter believe that individual products have little value but that extended offerings do.

Executives close to this deal say there were, early on, several bidders for American Home Products Corp. 's medical device businesses—including European device companies such as B. Braun Melsingun AGand Smiths Industries PLC , as well as some investors who saw the acquisition as purely a financial play. But in the end, the deal really belonged to Kendall Company, which hopes, with the addition of Sherwood-Davis & Geck , to create a product offering to rival its principal competitor, Johnson & Johnson .

The conventional wisdom on the deal is that AHP's divestiture of SD&G is further evidence that drug companies are getting...

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