Swiss medical device maker Synthes yesterday confirmed it is in takeover talks with Johnson & Johnson (J&J) over a deal that could value the firm at about $20bn (£12.3bn).
The move would be J&J’s biggest ever acquisition, giving it a leading position in equipment to treat trauma. Synthes, which posted sales of $3.7bn in 2010, makes nails, screws and plates to fix broken bones, as well as artificial spine discs.
A Synthes spokesman said: “In response to market speculation, Synthes confirms that it is engaged in discussions with Johnson & Johnson about a potential business combination transaction.”
A spokesman for J&J declined to comment.
Key to any deal will be Synthes chairman Hansjoerg Wyss – the second-richest person in Switzerland, with a net worth of $6.4bn according to Forbes. Wyss holds 40 per cent of Synthes directly and another eight per cent through family trusts. Some analysts doubt he will be willing to play ball with J&J, which would effectively kill off the deal.
Shares in British knee and hip maker Smith & Nephew (S&N) fell more than three per cent on the news that J&J is looking elsewhere.
Last year the firm confirmed it had rejected a £7bn bid from Johnson & Johnson and investors had hoped the US giant would come back with a bigger offer. One option for S&N could be a tie-up with US rival Biomet.
ADVISER: CREDIT SUISSE
Synthes has not officially confirmed which banks it has hired to advise it on the possible Johnson & Johnson (J&J) takeover but City A.M. understands it will be using its regular bank Credit Suisse.
The Swiss bank last month retained its top spot for M&A advisory work.
It is acting as financial adviser to fellow medical firm Community Health Systems, which recently increased its offer for Tenet Healthcare Corporation. It is also acting as joint global co-ordinator and bookrunners on the Glencore flotation, which is due to close in May.
Credit Suisse advised Prudential on its failed $35.5bn (£23bn) bid for AIA last year and then advised AIA on its successful IPO in Hong Kong in October, where it was valued at more than $35.5bn.
Credit Suisse, Synthes and J&J all declined to comment.