Johnson & Johnson is one of the world's largest health-care products companies in the world. Its name is seen on literally thousands of products purchased by consumers from California to the opposite coast and beyond. So when it comes to buying other billion-dollar corporations, the United States government gets a say in the deal.
Johnson & Johnson announced its intent to purchase Synthes Inc. for an incredible $19.7 billion. The acquisition required approval from the Federal Trade Commission recently reported that Johnson & Johnson agreed to the sale of another one of its subsidies that deals with similar surgical systems to Synthes in order to ensure that no antitrust issues arose. The company announced on June 12 that they received regulatory approval in the U.S.
One stock analyst explained some of the issues surrounding the deal. "The deal with allow J&J to have a dominant competitive positioning across the all of the major markets, an advantage that we think will become critical as we move into the new era of health-care cost containment." He also discussed the company's smart tax savings maneuver of paying for the acquisition through a stock repurchase plan of other major corporations, including JPMorgan Chase & Co.
Synthes is a company that sells medical devices, including screws, plates, bone grafts and other products. The products sold by this company are used in trauma surgeries. The subsidy that was sold was DePuy Orthopaedics Trauma business, another producer of trauma devices.
Mergers and acquisitions of this size not only require some finesse when it comes to drafting agreements, terms and negotiation of all of these, but it also requires finesse in dealing with government agencies. In short, they are very complicated and a lot of money is often on the line. When someone says that experience is vital in business transactions such as these, he or she is not kidding.
Source: nj.com, "J&J's $19.7 billion purchase of Synthes gets U.S. approval," June 13, 2012
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