J&J May Offer $21.3 Billion For Synthes

Dow component Johnson & Johnson JNJ will reportedly offer $21.3 billion for Synthes, the Swiss medical device maker. J&J could unveil the offer as early as Wednesday, the Wall Street Journal reported, citing sources familiar with the matter. New Jersey-based J&J has been pursuing Synthes to bolster its position as the leading provider of medical devices used in the treatment of serious fractures and other traumatic injuries. J&J's offer, which has been widely expected, values Synthes at $180.51 a share, a 22% premium to where the stock traded on April 14, a day before the Journal broke news of the deal. J&J is expected to pay for the deal with one-third cash and two-thirds stock. Last week, Synthes confirmed the deal with J&J was being discussed, but some shareholders of the Swiss firm may be seeking a higher offer from J&J. J&J has been dealing with a spate of product recalls by the FDA and could use the acquisition as a way of restoring shareholde confidence in the company. The company posted medical device sales of $24.6 billion in 2010 with a growth rate of 4.4%, well below what shareholders had seeen in previous years. Synthes had 2010 revenue of almost $3.7 billion. J&J has fallen behind rivals, including Synthes, in the race for sales of trauma products, a $5.5 billion market niche. J&J's last major acquisition was the 2006 deal to acquire Pfizer's PFE consumer products unit for $16.6 billion. Even at a price tag over $21 billion, that's a price range J&J can afford. The company showed $27.7 billion in cash and equivalent securities, according to an SEC filing released earlier this year.