Johnson & Johnson reportedly may spend about $20 billion to buy Synthes Inc., the biggest maker of devices to treat bone fractures and trauma, in a deal that may boost flagging sales at J&J’s orthopedic unit.
Johnson & Johnson, the world’s second-biggest seller of health products, is in talks with Synthes, The Wall Street Journal reported today, citing people familiar with the matter. It’s unclear what stage the talks are at and discussions could still fall through, the newspaper reported.
Synthes would give New Brunswick, New Jersey-based J&J hip screws, plates, surgical power tools and instruments to treat spinal and soft-tissue injuries that generated $3.69 billion in sales last year. J&J, the world’s biggest maker of artificial hips, saw joint-implant revenue fall in last year’s fourth quarter, hurt by the economy’s drag on medical procedures as well as a recall of hips used in 93,000 patients.
The acquisition would be “a good deal” for J&J, giving it access to a market growing faster than the hip and knee business, said Jeff Jonas, a Gabelli & Co. analyst in New York, in a telephone interview. Skeletal trauma “is more of a specialized niche that hasn’t attracted many players, and Synthes is the dominant presence in that market.”
Synthes, based in West Chester, Pennsylvania, and traded in Switzerland, has a market capitalization of $18.5 billion. Its shares rose 8.1 Swiss francs, or 6.2 percent, to 138.7 Swiss francs today in Zurich trading and have gained 17 percent since March 17, its low point for the year.
J&J rose 54 cents to $60.56 in New York Stock Exchange trading today and has lost 7.6 percent in the previous 12 months.
William Price, a J&J spokesman, declined to comment in a telephone interview. “As a policy, we don’t comment on rumor and speculation,” he said.
Calls to Synthes’ West Chester office were referred to the company’s investor-relations office in Zurich. A telephone message left there after normal business hours wasn’t immediately returned.
Pfizer Inc., based in New York, is the world’s biggest maker of healthcare products.
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