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JPC sold in merger with Ivax Corp.

In recent years, Jonhson Products Co. Inc. has gone through a drama that has wrenched both the Johnson family and the company's stockholders. But this summer, perhaps the most dramatic event took place when the $46-million haircare products manufacturer was acquired by the Miami-based IVAX Corp. in a one-for-one stock swap. The deal, which ends the firm's 39 years of black ownership, is valued at $61 million to $73 million, depending on the price of IVAS stock near the expected August closing date.

IVAX is a majority-owned publicly traded holding company for several cosmetics and pharmaceutical concerns. It reported 1992 sales of $451 million. Company officials say JPC, No. 23 on the BE INDUSTRIAL/SERVICE 100, will become a wholly owned subsidiary of IVAX with former JPC chairman and CEO Joan B. Johnson as president. IVAX will use JPC's Chicago facilities to manufacture some of its products and use JPC's expertise to help expand its niche in the African-American hair-care market.

"Johnson Products is a well-established, profitable company," says IVAX chairman and CEO Dr. Phillip Frost. "It is an excellent fit with Flori Roberts Inc., our cosmetics and skin-care subsidiary, which also focuses parts of its business on African-American consumers, and Baker Cummins Dermatologicals Inc., which markets an established line of medicated shampoos, conditioners and other skin-care products."

JPC marketing director Joan M. Johnson and company founder George E. Johnson), says the deal will expand the distribution of JPC products and benefits shareholders as well.

"As a publicly traded company, we must try every means to grow our business. We're not getting out of the business--we'll just have deeper pockets to give our customers better products," she says.

Lafayette Jones, president and CEO of Segmented Marketing Services Inc., a marketing firm in Winston-Salem, N.C., says the IVAX purchase may be the beginning of an earlier prediction that mainstream hair-care companies would eventually snap up their black counterparts. He warns that the deal creates an imbalance in the black hair-care category that could crush competitors.

"Further mergers are likely because several ethnic companies are near bankruptcy," says Jones. "African-American brands are going to have to consolidate or perish."

JPC was one of the only three publicly traded black-owned companies on the BE 100s. Its sale has heightened the continuing drama at JPC.
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Title Annotation:Johnson Products Company Inc.
Author:Chapelle, Tony
Publication:Black Enterprise
Date:Sep 1, 1993
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