Black-Owned Hair Care Firm OKs Purchase : Buyout: Johnson Products’ sale to Ivax Corp. would be a milestone in African-American business success.

Johnson Products Co., a hair care goods manufacturer that ranks among the nation’s largest black-owned companies, said Monday that it has agreed to be acquired by pharmaceuticals producer Ivax Corp. in a transaction valued at between $61 million and $73 million.

The buyout is considered a milestone in the entrepreneurial history of African-Americans because it involves one of the nation’s most successful, high-profile black manufacturers.

The deal would give Johnson Products access to additional finance needed to expand production and would allow Miami-based Ivax to sell its own personal care products through Johnson’s distribution network of supermarkets and drugstores.

Johnson Products, based in Chicago, makes hair relaxers, conditioners and shampoos aimed primarily at the African-American market. Gentle Treatment, Ultra Sheen, Afro Sheen and Classic Curl are among some of its more popular products.

Analysts had mixed reactions to the expected buyout.

“On one hand, it’s a sign of progress because it shows that a non-minority firm recognizes the value of a black company,” said William Cunningham, president of Creative Investment Research, a Washington-based firm. “On the other hand, I don’t see any remaining black manufacturers with the historical prominence of Johnson Products.”

Founded by George and Joan Johnson in 1954 with a $250 loan, Johnson Products last year had earnings of $5.4 million on sales of $42 million. Johnson ranked 23rd on Black Enterprise magazine’s 1993 list of the nation’s largest African-American-owned industrial and service companies.

Johnson Products in 1970 became the first black-owned company to sell shares on the American Stock Exchange. Joan Johnson, the company’s chair and chief executive, owns 54% of the stock. She said the deal would give Johnson Products access to additional financial resources.

“Strategically, this transaction has the potential to expand Johnson Products’ current distribution and increase the utilization of our Chicago (production) facility,” Johnson said.

However, industry observers say divisions within the Johnson family may have been a factor in the merger decision. Joan Johnson acquired control of the company in 1989 as the result of a divorce settlement with George Johnson.

The Johnsons’ son, Eric, was credited with engineering a turnaround during his 2 1/2-year tenure as chief executive. The younger Johnson attempted a leveraged buyout of the firm in 1991, but the plan failed and he was ousted last year.

Ivax Chairman Phillip Frost said the acquisition is part of the company’s strategy to enhance its four satellite businesses. Ivax’s other operations are in pharmaceuticals, chemicals, medical diagnostic and veterinary products. Ivax had earnings of $44.6 million on sales of $450 million last year.

Ivax produces Flori Roberts, a skin care and cosmetics line popular with African-Americans. Ivax sells its skin care and cosmetics products through department stores, while Johnson Products’ goods are sold primarily through mass marketers such as supermarkets.

The merger plan is an agreement in principle between Johnson Products and Ivax. Under the deal, each share in Johnson Products would be converted to one share of Ivax stock.

Based on Monday’s stock closings, the buyout would be valued at $67 million. Under the terms, the deal would proceed if the merger is valued as low as $61 million or as high as $73 million.