Johnson & Johnson to buy orthopedic device maker Synthes for $21.3 billion

Following earlier speculation, this morning, US diversified health care giant Johnson & Johnson (NYSE: JNJ) confirmed that it has reached agreement to acquire Switzerland-based orthopedic device maker Synthes (SYST: VX) for 159 Swiss francs per share, or $21.3 billion in total.

The offer price represents a 21.7% premium over the 130.60 francs that Synthes was trading at on April 14, before rumors concerning the deal first emerged (The Pharma Letter April 18). On completion of this transaction, Synthes and J&J’s DePuy companies together will comprise the largest business within the medical devices and diagnostics segment of the US firm. Though listed on the Swiss stock exchange, Synthes is based in West Chester, Pennsylvania, USA. The company has consistently increased its revenue and profits annually, reporting about $3.7 billion sales and $907.7 million net income last year,

Under the terms of the deal, each share of Synthes common stock, subject to certain conditions, will be exchanged for 55.65 francs in cash and 103.35 francs in J&J common stock. The transaction has an estimated net acquisition cost of $19.3 billion as of the close of business on April 26, 2011, based on Synthes approximately 119.5 million fully diluted shares outstanding and around $2 billion in cash on hand as of signing.