Deals



Johnson & Johnson completes acquisition of Synthes Inc


Posted: 15th June 2011 12:42

Johnson & Johnson (NYSE: JNJ), the world's most comprehensive and broadly-based manufacturer of health care products, and Synthes, Inc. (SWX:SYST.VX), a premier global manufacturer of orthopaedic devices, today announced that they have entered into a definitive agreement whereby Johnson & Johnson will acquire Synthes for CHF159 per share, or $21.3 billion.  Upon completion of this transaction, Synthes and the DePuy Companies of Johnson & Johnson together will comprise the largest business within the Medical Devices and Diagnostics segment of Johnson & Johnson. 

The transaction is valued at $21.3 Billion, based on CHF 159.0 Per Share and is Johnson & Johnson’s largest purchase to date.

The Boards of Directors of Johnson & Johnson and Synthes have each approved the transaction. Dr. Hansjoerg Wyss, Synthes founder and Chairman of the Board, and related parties have agreed to vote shares representing not less than 33% of Synthes common stock in support of the transaction.

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.

"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," said Bill Weldon, Chairman and Chief Executive Officer of Johnson & Johnson.  "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."

Said Dr. Wyss, Founder and Chairman of Synthes, "The combination of Synthes and Johnson & Johnson, two organizations focused on the best patient care and improving health care throughout the globe, is a very exciting and promising one.  It will ensure that physicians and hospitals will receive the utmost possible support in cooperation with the AO Foundation to help their patients.  The Synthes family will find a great home and support from Johnson & Johnson and will continue operating with its distinct culture and excellence in product development and physician education together with the AO Foundation.  I am very pleased and excited that my life's work will continue as part of Johnson & Johnson."

Said Michel Orsinger, President and CEO of Synthes, "Synthes and Johnson & Johnson are both respected as global leaders, sharing the mission of delivering the highest possible standard of patient care and also have very similar company cultures.

The combination presents a significant opportunity to jointly bring our products, services and educational offerings to the next level.  Together, we will be a more attractive and exciting company for our employees, and a more resourceful partner for our customers."

Synthes and DePuy would be well positioned to address significant market trends. These include an aging population, patient desire to remain active, increasing rates of obesity and the resulting impact on joint disease, growing treatment demands in emerging markets, and a movement toward earlier intervention.

Specifically, DePuy and Synthes together would bring:

The transaction is expected to close during the first half of 2012. For 2011, the transaction is not expected to impact the Company's previously issued guidance for adjusted earnings per share*.    For 2012, the transaction is currently anticipated to have a modestly dilutive impact on adjusted earnings per share*. Additional commentary regarding the financial impact will be discussed during the conference call noted below. Johnson & Johnson and Synthes will not be available for further comment until after the conference call has concluded.

The transaction is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act, approval by the European Commission and regulatory approval in certain other jurisdictions, as well as other customary closing conditions. The merger will require the approval of Synthes' stockholders, and will be effected by way of a statutory merger under Delaware law.  Since Synthes is incorporated outside of Switzerland, Swiss takeover regulations do not apply to the merger.

Medical devices and diagnostics accounted for 40 percent of J&J's $61.6 billion in 2010 sales, however the business has been hit by competition and recalls in its hip and knee replacement unit.  J&J owns around 250 separate companies under its corporate umbrella.

Goldman Sachs advised J&J in connection with this deal, while Credit Suisse is advising Synthes.  US Legal advice was provided by Cravath Swaine & Moore while Swiss legal advice was provided by Pestalozzi to J&J.  Based in Geneva and Zurich, Pestalozzi was founded in 1911 and has grown both in size and reputation to become one of the leading Swiss law firms.  Being a full service firm Pestalozzi caters to large domestic and foreign enterprises as well as medium-sized companies and private clients. Pestalozzi has particularly strong practice groups in life sciences, corporate transactions and tax all of which were involved in the Synthes transation and will continue to be involved with the integreation work to come. 

Pestalozzi's team, advising on Swiss law to Johnson and Johnson, included partners Christoph Ramstein for corporate/tax, Christoph Lang for M&A and antitrust, Silvia Zimmermann for tax, Martin Müller for executive compensation and benefits and Lorenza Ferrari on regulatory and IP law.

Cravath Swaine & Moore advised the buyer on US law, with a team led by Robert Townsend and Damien Zoubek for corporate, Eric Hilfers for employment and Andrew Needham on tax law. Sullivan & Cromwell provided further counsel, with Stephen Kotran advising on US corporate law.
 

Acting for the seller, Homburger’s Reto Heuberger advised on Swiss law, and Shearman & Sterling’s Christa D'Alimonte and Paula Anderson advised on US law. 
 

For more information please visit: http://www.jnj.com/connect/

Swiss legal adviser to Johnson & Johnson

Pestalozzi Attorneys at Law 

Partner Christoph Ramstein commented: 

I am working for JNJ since over 20 years. The fact that we have a very strong corporate transaction group, good tax lawyers and regulatory experience in our life sciences practice group together with the solution focused efficient work contributed certainly to the excellent long standing relation. This is of particular importance since JNJ like other of our clients such as Glencore and Dow Chemical do have substantial Swiss operations from which they manage the supply chain, develop growth and plan tax efficient, risk adjusted structures.”

Mr Ramstein can be contacted on + 41 44 217 91 11 or by email at christoph.ramstein@pestalozzilaw.com


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