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Johnson & Johnson targets Synthes bid

Swiss medical firm Synthes confirmed yesterday that it's in talks regarding a possible takeover by drug giant Johnson & Johnson (J&J) in a move that's likely to value the company at as much as €15bn.

The takeover deal would be the largest in J&J's 125-year history as it seeks to recover from pulling more than 50 products off the market since the start of 2010.

Buying Synthes, the biggest maker of devices to treat bone fractures and trauma, would end months of speculation about talks between J&J and UK device maker Smith & Nephew.

Synthes would give New Jersey-based J&J a line of hip screws, surgical power tools and instruments to treat spinal and soft-tissue injuries that had $3.7bn (€2.6bn) in 2010 sales.

"If I were J&J, I would rather buy Synthes," said Lisa Bedell Clive, an analyst with Sanford C Bernstein in London. "It's the chance to become the market leader in trauma," which has more long-term growth and profit-margin potential than replacement hips and knees.


Smith & Nephew, which had been considered by J&J as a potential takeover target according to people familiar with the situation, fell as much as 5.2pc in London.

A takeover would burden J&J, the world's second-biggest maker of healthcare products after Pfizer and an 18pc shareholder in Irish drug firm Elan, with another business grappling with recalls and charges of pushing dangerous products.

J&J chief executive officer William Weldon is already managing recalls, a US probe of J&J's consumer manufacturing and more than 600 lawsuits tied to faulty artificial hips.

"You could make a fair argument it's not the right time to expand," said Mark Bussard, an analyst at Baltimore-based T Rowe Price Group. (Bloomberg)

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