Depending on how you do the calculation, Alza Corp. just sold itself to Johnson & Johnson [See Deal] for nearly twice what Abbott Laboratories Inc. had been willing to pay almost two years before [See Deal]—about $45 a share in J&J stock vs. a split-adjusted $22 a share in Abbott stock in June 1999. (See"Alza Takes Independence Road to Acquisition," IN VIVO, July 1999 [A#1999800166 and "The FTC Takes a Closer Look at Consolidation," IN VIVO, December 1999 [A#1999800249.) That works out to about $13 billion—or somewhere in the neighborhood of 45 times projected 2001 earnings.
Not that investors were particularly delighted at this extraordinary price. In the first place, analysts weren't overwhelmed by the doubling in value since Alza is now worth twice what Abbott...