Johnson & Johnson seals $21.3bn deal for device firm Synthes
Published 28/04/2011 | 05:00
Johnson & Johnson (J&J) has agreed to buy Synthes for $21.3bn in the biggest purchase of the company's 125-year history, to become the leader in the $5.5bn market for devices that treat trauma victims.
Synthes holders will receive 159 Swiss francs a share in cash and stock, the companies said in a statement yesterday. That's 8.5pc above the closing price yesterday and 15pc higher than April 15, the last trading day before West Chester, Pennsylvania-based Synthes said it was in talks. The shares of Synthes trade in Switzerland.
J&J will gain a majority in the trauma market with the acquisition, CEO Bill Weldon said in a conference call.
The purchase also gives J&J a device company with an operating margin of 35pc, the highest among medical-products makers with stock values of more than $5bn.
New Brunswick, New Jersey-based J&J, the world's second-biggest seller of health products, has had more than 50 drug and device recalls since the start of 2010.
"Very infrequently do you ever see an opportunity for a company like Synthes to come into play with J&J," Mr Weldon said on the call.
"We just thought this was an extraordinary opportunity and the time was right."
Synthes already has 50pc of the market for sales of screws, plates, bone grafts and other products to treat skeletal injuries, "as well as scale and margins", Navid Malik, an analyst with Matrix Corporate Capital, said last night.
"It certainly complements J&J's orthopedics business."
The acquisition will lead to increased competition and will benefit doctors, customers and patients, Alex Gorsky, vice chairman of J&J's executive committee, said.
"We believe we will not be required to make any divestitures and if there are any, they will not materially impact the transaction," he said.
Synthes chairman, Hansjoerg Wyss, the company's founder, and related entities agreed to vote at least 33pc of the company's stock in favour of the deal, the companies said.
The sale may make Mr Wyss the richest person in Switzerland, surpassing biotechnology billionaire Ernesto Bertarelli.
Synthes holders will receive 55.65 francs a share in cash, and 103.35 francs a share in J&J stock, the statement said.