J&J, Synthes ink $21.3B cash-and-shares deal

It's official: Johnson & Johnson has agreed to buy the device maker Synthes for 159 Swiss francs per share, or about $21.3 billion total. It's the company's largest deal ever, and analysts have said that Synthes is a good fit for J&J, offering products and market share in the bone-repair category.

J&J will merge Synthes with its DePuy operations, creating an organization that would own nearly 28 percent of the orthopedic device market, more than twice that of second-place device maker Stryker. Plus, Synthes has almost half of the trauma market, Bloomberg points out. J&J has cited a 6.4 percent annual growth figure for the orthopedic segment of the device industry--an impressive figure, considering the slowing growth in the branded-drugs business.

The deal structure is a bit unusual, however, as the Wall Street Journal points out. The cash portion of J&J's offer is 55.65 Swiss francs. The rest will be made up in J&J shares. That means the precise, final price will only be set 10 days before the deal is to close, the newspaper figures. The stock portion could vary with fluctuations in J&J shares, not to mention currency changes. So, although the deal includes some provisions to hedge against those changes, but the final price still isn't completely, positively certain.

Meanwhile, one analyst told Bloomberg that investors aren't bidding up Synthes shares much, perhaps because they're afraid the deal might not go through. Some J&J shareholders might not want the company to focus on such a big acquisition when it's working to fix its quality-control problems.

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