Johnson & Johnson’s Synthes Acquisition Could Get The Stock Moving

+13.79%
Upside
158
Market
180
Trefis
JNJ: Johnson & Johnson logo
JNJ
Johnson & Johnson

Johnson & Johnson (NYSE:JNJ) has received much awaited FTC approval to complete the acquisition of Swiss medical device maker Synthes. However, the approval is contingent on a condition that JNJ will sale its subsidiary DePuy orthopaedics to Biomet. [1]. The $19.7 billion acquisition could trigger an upside for the company’s stock, which recently has been grappling with a host of lawsuits related to the Medical Devices and Diagnostics franchise.

We have a price estimate for JNJ at $74, implying a premium of nearly 15% to the current market price. We will soon be updating our model to reflect the acquisition.

See our complete analysis for Johnson & Johnson

Synthes acquisition to help boost growth

Synthes has a wide portfolio of medical devices for orthopedics market including trauma and spine. The combined JNJ/Synthes orthopedic division would have the broadest orthopedic portfolio globally. We believe that the acquisition will lend support to the company’s efforts to tap growth opportunities in the orthopedics market. JNJ expects the trauma and knee markets to grow 7% and believes spine could rebound to a 5% rate of growth.

Relevant Articles
  1. Will Johnson & Johnson Stock Rebound To Its Pre-Inflation Shock Highs of $185?
  2. Should You Pick Johnson & Johnson Stock At $160?
  3. Should You Pick Johnson & Johnson Stock After A 6% Fall In A Month Despite Upbeat Q3?
  4. What’s Happening With Johnson & Johnson Stock?
  5. Johnson & Johnson Poised For A Muted Q2?
  6. Cross-Sector Comparison: Is Caterpillar Stock A Better Pick Over J&J?

Further, the acquisition will also bring the Synthes’s vast exposure to fast growing emerging countries including China, India and Russia.

Understand How a Company’s Products Impact its Stock Price at Trefis

Drug Marketing Accord

Notes:
  1. Johnson & Johnson Receives U.S. Regulatory Clearance for Synthes Acquisition; Closing Date for Transaction Set, MarketWatch, June 12 2012 []