J&J plans to buy Synthes for $20 b

J&J plans to buy Synthes for $20 b

A deal at that price would mark an 11 per cent premium over Synthes’ current market capitalisation of around $18 billion.

However, the talks were characterised as fragile and could fall apart at any time, one person told the Journal.

Synthes shares closed up 6.2 per cent in Switzerland, with traders citing market talk that the diversified healthcare company or US medical device maker Medtronic Inc could be interested in buying the company. J&J owns some 250 separate companies under its corporate umbrella and a Synthes purchase would be its largest ever acquisition. The company attempted to acquire US medical device maker Guidant several years ago, but was outbid by Boston Scientific Corp.

Medical devices and diagnostics accounted for 40 per cent of J&J’s $61.6 billion in 2010 sales. But the business has been hit by competition and its hip and knee replacement division has been hampered by product recalls.

J&J has also been plagued by a series of recalls in its consumer health division with bottles and packages of Tylenol, Rolaids, Motrin and other products being pulled from store shelves. Its consumer products manufacturing practices were deemed to be such a shambles that some of its plants have been placed under government supervision.

Prior to the Synthes report, there had been speculation that J&J was looking at buying Smith & Nephew.