Johnson & Johnson and Smith & Nephew were nearing a $34 billion deal to combine their orthopedic businesses before disagreements over who would lead the merged company derailed negotiations, according to an Oct. 23 Financial Times report.
The companies had agreed on key financial terms and the structure of the proposed transaction, but talks collapsed after Smith & Nephew rejected J&J’s choice of Namal Nawana, a former Smith & Nephew CEO who now leads J&J’s orthopedic division, to run the combined business.
Smith & Nephew insisted its current CEO, Deepak Nath, retain the top position. Chair Rupert Soames made that a condition of the deal, according to people familiar with the negotiations who spoke with the Financial Times.
The proposed transaction valued J&J’s orthopedic business, formerly known as DePuy Synthes, at as much as $22 billion. Under the proposed terms, J&J shareholders would have owned 50.1% of the combined company, while Smith & Nephew shareholders would have held the remainder. Smith & Nephew also would have paid J&J roughly $10 billion through debt financing.
The companies had targeted a mid-October deal announcement before negotiations ended. J&J is now leaning toward spinning off its orthopedic division as a separately listed company, according to the report.
Both companies declined to comment to the Financial Times.
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