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. . 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.
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.
- Nearly 10% Of J&J’s Value Is Contingent On The Growth Of These 2 Drugs
- Johnson & Johnson Earnings Preview: Don’t Expect Big Surprises
- After 2015 Hiccup, J&J Was Back On Track In 2016
- Actelion May Not Come Cheap For J&J
- Will J&J Buying Actelion Be Good For Investors?
- Key Takeaways From Johnson & Johnson’s Q3’16 Earnings
Further, the acquisition will also bring the Synthes’s vast exposure to fast growing emerging countries including China, India and Russia.Notes:
- Johnson & Johnson Receives U.S. Regulatory Clearance for Synthes Acquisition; Closing Date for Transaction Set, MarketWatch, June 12 2012 [↩]