Johnson & Johnson to acquire Synthes for $21.6 billion

NEW BRUNSWICK, N.J. & WEST CHESTER, Pa.—Johnson &Johnson will be growing even further this month as the health care productgiant acquires Synthes, Inc., a global manufacturer of orthopedic devices. Thetwo companies have entered into a definitive agreement by which Johnson &Johnson will acquire Synthes for a price of CHF159 per share, or $180 pershare, for a total of $21.3 billion. Once the transaction is complete, Synthesand the DePuy Companies of Johnson & Johnson combined will form the largestbusiness within Johnson & Johnson's Medical Devices and Diagnosticsdivision. The Boards of Directors of each company have approved thetransaction.

"DePuy and Synthes together will create the most innovativeand comprehensive orthopaedics business in the world and enable us to betterserve clinicians and patients worldwide," says Bill Weldon, Chairman and ChiefExecutive Officer of Johnson & Johnson. "Orthopaedics is a large andgrowing $37 billion global market and represents an important growth driver forJohnson & Johnson. Synthes is widely respected for its innovativehigh-quality products, world-class R&D capabilities, its commitment toeducation, the highest standards of service, and extensive global footprint."

Per the agreement, every share of Synthes common stock willbe exchanged for CHF55.65 ($63.3) in cash and CHF103.35 ($117.5) in Johnson& Johnson common stock. The estimated net acquisition cost of thetransaction is $19.3 billion as of the close of the business day yesterday,based on approximately 119.5 million fully diluted shares of Synthes stockoutstanding and approximately $2 billion in cash on hand as of the signing.

"The combination of Synthes and Johnson & Johnson, twoorganizations focused on the best patient care and improving health carethroughout the globe, is a very exciting and promising one," says Dr. HansjoergWyss, Founder and Chairman of Synthes. "It will ensure that physicians andhospitals will receive the utmost possible support in cooperation with the AOFoundation to help their patients." Wyss and related parties have agreed tovote shares that represent not less than 33 percent of Synthes common stock infavor of the agreement.

The combination of the two companies puts them in a strongposition for addressing recent market trends such as the aging population,increases in obesity rates and the resulting relation to joint disease, growingtreatment demands, patient desire to remain active and a movement towards earlierintervention in care rather than treatment. DePuy has a diverse orthopedicsportfolio, and Synthes has impressive innovations in trauma, spine,cranio-maxillofacial and power tools, and the combination offers a wide rangeof available technology. With Johnson & Johnson's technology, equipment andglobal reach, and Synthes' own global connections and experience, the twocompanies together "will be a more attractive and exciting company for ouremployees, and a more resourceful partner for our customers," says MichelOrsinger, President and CEO of Synthes.

"Synthes and Johnson & Johnson are both respected asglobal leaders, sharing the mission of delivering the highest possible standardof patient care and also have very similar company cultures," says Orsinger."The combination presents a significant opportunity to jointly bring ourproducts, services and educational offerings to the next level."

Subject to clearance under the Hart-Scott-Rodino AntitrustImprovements Act, approval by the European Commission, regulatory approval andcustomary closing conditions, the closing of the transaction is expected in thefirst half of 2012. the merger requires Synthes' stockholders' approval andwill be effected by way of a statutory merger under Delaware law. While thetransaction is not expected to impact Johnson & Johnson's previously issuedguidance for adjusted earnings per share in 2011, it is expected to be modestlydilutive to adjusted earnings per share in 2012.

"The Synthes family will find a great home and support fromJohnson & Johnson and will continue operating with its distinct culture andexcellence in product development and physician education together with the AOFoundation," says Wyss. "I am very pleased and excited that my life's work willcontinue as part of Johnson & Johnson."