As expected, Johnson and Johnson has announced a multi-billion-dollar deal to acquire Synthes and thereby create "the world's most innovative and comprehensive orthopaedics business".
Following weeks of speculation the healthcare giant has unveiled a definitive agreement under which it has agreed to buy orthopaedic devices maker Sythnes for CHF 159 per share, which equates to a whopping $21.3 billion and reportedly marks the firm's biggest deal in its long history.
Both boards of directors have OK'd the deal which, when completed, will see the coming together of J&J's DePuy group and Sythnes to create the largest business within J&J's Medical Devices and Diagnostics division.
“DePuy and Synthes together will create the most innovative and comprehensive orthopaedics business in the world and enable us to better serve clinicians and patients worldwide,” said Bill Weldon, J&J's chairman and chief executive.
And shedding further light on the strategy behind the move, he noted that orthopaedics is a large and growing $37 billion global market and represents "an important growth driver" for J&J. "Synthes is widely respected for its innovative high-quality products, world-class R&D capabilities, its commitment to education, the highest standards of service, and extensive global footprint," he added, explaining J&J's attraction to the firm.
Addressing market trends
In addition, Synthes and DePuy will be well placed to address significant market trends such as "an aging population, patient desire to remain active, increasing rates of obesity and the resulting impact on joint disease, growing treatment demands in emerging markets, and a movement toward earlier intervention," J&J noted.
Sythnes pulled in sales of $3.7 billion last year, growing 7.5% over 2009, and presents an attractive proposition for J&J, which has been hit by a series of product recalls over the last year or so that have put a sizeable dent in its turnover.
The transaction, which is still subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act and other regulatory approvals/closing conditions, is expected to complete during the first half of 2012.