J&J in Talks with Synthes Over Possible Acquisition
BY LAUREN UZDIENSKI, APRIL 18, 2011
Synthes has confirmed rumors that the company is in talks to be acquired by J&J, reportedly for around $20 billion. In 2010, Synthes reported $3.7 billion in total sales. The Wall Street Journal states that if the deal goes through, it will be J&J's largest acquisition ever and would "reinvigorate its device business."
The market responded favorably to the news. This morning, Synthes' stock opened up 12% in Zurich trading, its largest intraday gain since 2003.
In comments to the WSJ, one analyst said that trauma is a "gaping hole" for DePuy, and that "Synthes really is a good match for them." In addition to holding about 50% of the trauma market, Synthes has spine and CMF product portfolios. In terms of geography, the company has an increasing presence in emerging markets, an area that J&J is targeting for growth.
However, in addition to these synergies, there are potential complications for the merger as well. The transaction could attract anti-trust concerns, though some reports suggest these are not likely to be insurmountable. A WSJ blog describes how the sell-or-not decision will fall to Dr. Hansjorg Wyss, Synthes' famously private chairman and the owner of 48% of the stock. Further, it's also unknown how J&J and Synthes would manage the company's relationship with the AO Foundation, the non-profit surgical research group that has been allied with Synthes for years.
