Issue: July 2012
June 13, 2012
1 min read

Johnson & Johnson receives U.S. regulatory clearance for Synthes acquisition

Issue: July 2012
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Johnson & Johnson announced it received U.S. regulatory clearance for its proposed acquisition of Synthes Inc., completing all regulatory approvals required to close the transaction.

According to a company press release, Johnson & Johnson plans to close the Synthes transaction on June 14 for a total purchase price of approximately $19.7 billion in cash and stock. The European Commission granted its antitrust approval for the reaction on April 19, according to the release.


Johnson & Johnson announced they expect no third-party debt to be incurred in connection with the acquisition.

The acquisition is expected, Johnson & Johnson noted in the release, to be accretive to 2012 adjusted earnings per share by approximately $0.03 to $0.05. Previously, the company disclosed the acquisition was anticipated to be dilutive to earnings per share by $0.22, although this was based on financial information from 2010. The current estimate reportedly reflects a mid-year 2012 closing date, as well as current sales estimates for the combined orthopedics business.

As part of a requirement for acquiring Synthes, Johnson & Johnson was ordered by the U.S. Federal Trade Commission (FTC) to sell DVR — its system for operatively treating distal radius wrist fractures — as ownership of that system as well as Synthes would constitute an illegal reduction of competition. According to an FTC news release, Johnson & Johnson intends to sell the system and the rest of its DePuy product line for the treatment of traumatic injuries to Biomet Inc.

The divestiture is expected to close in the second quarter.

“[Johnson & Johnson] and Synthes are direct competitors for these important systems used in the surgical treatment of traumatic wrist fractures,” Richard Feinstein, director of the FTC’s Bureau of Competition, stated in the FTC release. “This order will ensure that the hospitals and surgeons that use these systems to care for consumers will not face higher prices or reduced innovation in the future.”

Further information on the transaction, including earnings guidance for 2012, will be shared during Johnson & Johnson’s next quarterly earnings analyst conference call on July 17.