Johnson & Johnson (JNJ) said it expects to close its $19.7 billion bid
for medical-device maker Synthes Inc. (SYST.VX) this Thursday, after
it received all U.S. and European regulatory clearance for the deal.
J&J said it expected to post $1.1 billion in special charges related
to the purchase through 2012, including restructuring and integration
costs.
The acquisition is the biggest purchase in Johnson & Johnson's
125-year history, and is part of the health-care company's plan to
become the leader in the $5.5 billion market for devices that treat
trauma victims. The deal, initially valued at about $21.3 billion, has
been expected to close in the first half of this year.
Based on a Thursday closing date, each outstanding share of Synthes,
which trades in Switzerland, will be converted into the right to
receive 55.65 Swiss francs ($58.27) and 1.717 shares of J&J stock.
The acquisition is expected to benefit 2012 adjusted per-share
earnings by three cents to five cents. The company had previously
expected the deal to hurt this year's earnings by 22 cents a share,
based on 2010 financial information.
For 2013, the first full year of the acquisition, the deal is expected
to benefit adjusted per-share earnings by 10 cents to 15 cents.
To finance the deal, the company entered into an accelerated share
repurchase agreement with Goldman Sachs Group Inc. (GS) and JPMorgan
Chase & Co. (JPM) to purchase 203.7 million shares of its own stock
for about $12.9 billion. Those shares, along with cash on hand, will
be used to fund the deal. J&J said it doesn't expect to use any debt
to fund the deal.
Additional information on the transaction, including full-year
earnings guidance, will be reported in its next quarterly earnings
conference call, scheduled for July 17, the company said.
Earlier this week, the Federal Trade Commission said it will require
J&J to sell its system for surgically treating serious wrist fractures
to rival Biomet Inc. as a condition of the deal. DePuy Orthopaedics
Inc., a J&J subsidiary, plans to sell the wrist-fracture business,
along with the rest of its trauma business, expecting to close the
sale in the second quarter.
J&J late last week said it plans to set aside an additional $600
million in its second quarter for potential legal settlements, as it
deals with a series of lawsuits over accusations of bribery and
improper drug-marketing practices. The company in April said its
first-quarter earnings rose on lower expenses and a
foreign-exchange-related gain tied to the Synthes deal.
Shares closed Tuesday at $63.08 and were down 28 cents after hours.
The stock is down 3.8% so far this year.
Write to Ben Fox Rubin at ben.rubin@dowjones.com
(END) Dow Jones Newswires
June 12, 2012 19:05 ET (23:05 GMT)
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