Johnson & Johnson Inc. announced Wednesday that it plans to buy Swiss medical-device maker Synthes Inc. for $21.3 billion in order to expand its expanding orthopedic-device sector. Reports from the past weeks suggested the company would buy Synthes for about $20 billion. The final price of the deal won’t be determined until 10 days before closing, which will include cash and stock options. Analysts believe the deal may not happen for at least a year.
Under the terms of the deal, Synthes shareholders would receive 55.65 Swiss francs in cash and 103.35 in Johnson & Johnson common stock for each share. Johnson & Johnson already operate several orthopedic-device businesses under the brand DePuy. Once the deal closes, DePuy and Synthes will make for the largest segment of the company’s medical device division.
“Orthopedics 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 William Weldon, Johnson & Johnson chief executive.
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Merck & Co., the second-largest U.S. drug maker has also increased a share repurchase program by $5 billion, which raises the total amount of stock that can be bought back to $6.4 billion. According to a statement, Merck drew $10.8 billion in cash from operating activities last year and agreed to split sales for its arthritis drug Remicade with Johnson & Johnson, ending a dispute that assisted in driving Merck’s stock down over the last year.