The Wall Street Journal recently reported that Johnson & Johnson (J&J) was in talks to purchase Switzerland-based Synthes for about US$20 billion. If it takes place, the deal would be the biggest in J&J’s 125-year history, the newspaper reported.
In terms of the spine market, this represents a potential merger between J&J’s Depuy Spine which is ranked number two in terms of market share, with Synthes, which is currently ranked number three. Any resulting entity formed from the potential combination of these two companies could well be the largest orthopaedic company in the world.
While speculation was rife for a few days, on 18 April, Synthes released a statement which said, “In response to market speculation, Synthes, confirms that it is engaged in discussions with Johnson & Johnson about a potential business combination transaction. No assurance can be given as to whether, when or on what terms any possible transaction might occur. Synthes does not intend to make any further public statements unless and until a definitive agreement has been reached, or until discussions between the parties have terminated.”
In recent times, J&J has been beset by problems including numerous product recalls and settlement related to publicly disclosed Foreign Corrupt Practices Act investigations by the US Department of Justice and the US Securities and Exchange Commission. If the deal takes place, the big question remains whether the acquisition could provide J&J a welcome boost. The value of Synthes shares rose after the Wall Street Journal’s report.