J&J to buy medical device maker Synthes for $21.3B

[April 27, 2011]  GENEVA (AP) -- Health giant Johnson & Johnson said Wednesday it will buy U.S.-Swiss medical device maker Synthes Inc. for 21.3 billion, greatly increasing its share of the market for surgical trauma equipment and orthopedic implants.

J&J is offering 159 Swiss francs in cash and stock for each Synthes share -- a premium of 8.5 percent on Tuesday's closing price.

"Orthopedics is a large and growing $37 billion global market and represents an important growth driver for Johnson & Johnson," CEO Bill Weldon said in a statement.

New Jersey-based J&J said Synthes would complement its own DePuy orthopedics portfolio to address what it called "significant market trends."

These include aging populations and increased rates of obesity, both of which result in greater demand to treat joint disease, it said.

Synthes is based in West Chester, Pennsylvania, but has its global headquarters in Solothurn, Switzerland. It trades on the Zurich exchange, where shares were up 0.8 percent at 147.60 francs by mid-morning Wednesday.

Analysts at Zuercher Kantonalbank said the purchase price was at the lower end of their predictions, but didn't expect another bidder to jump in at the last moment. The deal is expected to close in the first half of 2012.

The sale of Synthes would make its multibillionaire chairman, Hansjorg Wyss, the second-richest man in affluent Switzerland after Swedish-born Ikea founder Ingvar Kamprad.

Wyss, a graduate of Harvard, owns a 40-percent share of the company, and his family's trust owns a further 8 percent.

"I am very pleased and excited that my life's work will continue as part of Johnson & Johnson," the 75-year-old said in a statement.

Synthes pleaded guilty last year to a felony and dozens of misdemeanor crimes over unauthorized testing of its bone cement on spinal surgery patients, even though the cement was approved only for use in the arm. Three patients died on the operating table.

Synthes and subsidiary Norian Corp. performed the tests from 2002 to 2004. The companies agreed to pay $23 million in fines.

Johnson & Johnson, meanwhile, has suffered repeated product recalls, resulting in the yearlong closure of a nonprescription medicine factory in Fort Washington, Pennsylvania.

[Associated Press; By FRANK JORDANS]

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