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Synthes confirms J&J talks

The medical device maker Synthes, which trades on the Swiss exchange but has its global headquarters in Pennsylvania, has confirmed that it is in talks to be bought by Johnson & Johnson

The medical device maker Synthes, which trades on the Swiss exchange but has its global headquarters in Pennsylvania, has confirmed that it is in talks to be bought by Johnson & Johnson.

"In response to market speculation, Synthes confirms that it is engaged in discussions with Johnson & Johnson about a potential business combination transaction," the company said in a statement. "No assurance can be given as to whether, when or on what terms any possible transaction might occur."

Synthes said it would not provide any further details until a deal had been reached or the talks had been terminated, but media and analyst speculation put the value of the potential transaction at about $19.5bn, which would make it the biggest acquisition in J&J's history.

Synthes is focused on developing, manufacturing and marketing instruments, implants and biomaterials for surgeries and regeneration of the skeleton and soft tissues. The company is the largest manufacturer in the world of devices to treat bone fractures and trauma, with full-year sales of nearly $7bn in 2010. The merger would form a company that claimed more than half of the global trauma market.

The news of the Synthes talks suggests that J&J is exploring an alternative to the possibility of acquiring the UK-based device firm Smith & Nephew, which has been speculated about for months.

J&J, which is the world's largest manufacturer of artificial hips, saw its own medical device revenues hurt last year by a recall of 93,000 artificial hips that were made by the company's DePuy unit and proved to have a high failure rate. The device recall came amid wide-reaching and high-profile recalls of a number of J&J over-the-counter medicines, including Tylenol and Motrin.

In light of the news about the possible Synthes acquisition this week, some analysts complained that J&J should focus on sorting out its internal difficulties before looking to pull off such a large and complex acquisition deal.

To complicate matters further, Synthes has had its own recent recall woes, recalling its spinal implants in 2009 after they failed and caused danger to patients.

19th April 2011

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