J&J Strikes $21 Billion Takeover Deal for Synthes

April 27, 2011
Deal boosts J&J's medical equipment business, which made up 40% of its 2010 revenues

In one of the biggest deals so far this year, health care giant Johnson & Johnson announced on April 27 an agreement on a $21.3 billion takeover of U.S.-Swiss medical technology company Synthes.

"The transaction is expected to close during the first half of 2012," the companies said. Although the deal has been approved by the boards of Synthes and Johnson & Johnson, it is still subject to approval by shareholders as well as regulatory authorities in the United States and European Union.

Synthes, the product of the merger in 1999 of U.S. and Swiss firms, specializes in instruments, implants and biomaterials for use in orthopedic surgery. It would be grafted on to Johnson's own orthopedic specialist, DePuy. "DePuy and Synthes together will create the most innovative and comprehensive orthopedics business in the world," said Bill Weldon, chief executive of Johnson.

The transaction would boost J&J's medical equipment business, which made up 40% of its 2010 revenues.

"Orthopedics is a large and growing $37 billion global market and represents an important growth driver for Johnson & Johnson," he added.

It would also bring a huge windfall for Synthes chairman Hansjoerg Wyss, who owns about 40% of the company. Forbes magazine rated the 76-year-old's fortune at $6.4 billion in March, ranking him at 154th on its global rich list.

Analysts at Zuercher Kantonalbank (ZKB) expressed surprise at the deal, noting that Wyss had been reluctant to let go until now. "The price is towards the lower end of the range," they said in a note to investors.

The deal ranks alongside U.S. group Duke Energy's $25 billion proposed takeover of rival Progress Energy announced this year and behind telecommunications giant AT&T's proposed $39 billion acquisition of US operations of Germany's T-Mobile.

Copyright Agence France-Presse, 2011

See Also
Merck Pays J&J $500 Million in Settlement

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