Johnson & Johnson is reportedly in talks with device maker Synthes Inc. about a possible takeover, potentially the biggest deal in Johnson & Johnson’s 125-year history. Synthes has a market value of about $19 billion, and a takeover of the company could give Johnson & Johnson just what it needs deflect the negative press it has received over the past year from recalled products that range from over-the-counter medicines and consumer products to artificial hip implants.
Synthes is the largest maker of devices to treat bone fractures and trauma. Merging with Synthes’ Smith & Nephew Plc. would add more trauma products to Johnson & Johnson’s lineup, including hip screws, surgical power tools and instruments to treat spinal and soft-tissue injuries.
But is this the right time for Johnson & Johnson to be entertaining thoughts of a takeover? Analysts have mixed opinions. For starters, the consumer and health care products giant is swimming in product recalls, which have driven down profits as well as public confidence in the company.
A recall of the ASR hip replacement system, manufactured by Johnson & Johnson subsidiary DePuy Orthopaedics, has left the company the target of more than 600 lawsuits. That number is expected to grow as more of the 93,000 people affected by the recall come forward.
For now, Johnson & Johnson is keeping mum about any possible takeovers, and Synthes says it does not plan to provide any more details until a definitive agreement has been reached or talks have been terminated.