Johnson & Johnson to Acquire Orthopaedic Device Maker Synthes for $21 Billion (JNJ)

Johnson & Johnson JNJ announced Wednesday that it would acquire Synthes, a global manufacturer of orthopaedic devices, for more than $21 billion. Under the terms of the agreement, each share of Swiss-based Synthes common stock will be exchanged for CHF55.65 in cash and CHF103.35 in Johnson & Johnson common stock. The transaction has an estimated net acquisition cost of $19.3 billion as of the close of business on April 26, 2011, based on Synthes approximately 119.5 million fully diluted shares outstanding and approximately $2 billion in cash on hand as of signing. The Boards of Directors of Johnson & Johnson and Synthes have each approved the transaction. According to a company release, "DePuy offers one of the most diverse orthopaedics portfolios in the industry, while Synthes is recognized for its innovations in trauma, spine, cranio-maxillofacial and power tools. Together, the companies will offer surgeons and patients a unique breadth and depth of technology and service worldwide to meet their orthopaedic needs." Bill Weldon, Chairman and CEO of Johnson & Johnson expressed optimism for the future. "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. Orthopaedics is a large and growing $37 billion global market and represents an important growth driver for Johnson & Johnson. 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." Shares of Johnson & Johnson gained $0.84 on Tuesday, to close at $64.95. Johnson & Johnson and its subsidiaries are engaged in the research and development, manufacture and sale of a range of products in the health care field. The company holds a market capitalization north of $175 billion.