Chillin' out till it needs to be funded
J&J has seen better days especially with brand rebuilding taking up the better part of 2010 and Pfizer and Glaxo running away with the honors with a Genzyme bid and the GAVI alliance prizes in $ 40 bln in vaccination deals. Even Merck has signed up smaller agile JVs in India and Asia/Africa with multiple partners including Wellcome and Sun Pharma. Pfizer followed thru with a deal with Biocon despite manufacturing outsourcing questions at Ranbaxy and Sree Aurobindo Pharma.
J&J has ofcourse more in the consumer healthcare space than others as also had a much better retail/corporate brand before its family troubles overshadowed 2010. It still has $24 billion in Cash and $14 billion in annual cash flow to commit to deals. Of course, given that the value is more obvious in agile JVs and partners like sun Pharma and BIocon or similar boutique plays on the west coast, like the Amylin one for Eli Lilly , w=one would have thought that the ability of the sector to outbid itself out of value in any deal would have subsided after Novartis and Sanofi Aventis’s recent experiments. But the important part is probably to just stay in the game and too much of cash lying around may not be helping. The acquisition candidate in this case is equipment maker Synthes valued at $18 billion in the Swiss markets where it is listed. J&J already earns $24.6 billion from medical devices business segment
Synthes is individually owned to 47% by Hans Wyss its Chairman and CEO
As NY times reports in the eternal Dealbook
Johnson & Johnson, the giant maker of health and consumer products, has long been seen as ready to strike a big deal. Analysts at Bank of America
Merrill Lynch wrote in a research note last month that the company had a relatively low amount of debt, as well as $28 billion in cash and short-term investments and $14 billion in annual free cash flow.
Johnson & Johnson has struck about six deals worth more than $1 billion since 1998. Its largest takeover to date was its $16.6 billion purchase of Pfizer‘s consumer health care division in 2006. That same year, the company lost a bidding war for Guidant, a maker of stents and pacemakers, to Boston Scientific, which ultimately paid nearly $27 billion.
Synthes, which is based in West Chester, Pa., but is listed on the Swiss stock exchange, is a big manufacturer of implants to repair bone fractures, as well as surgical power tools. The company has consistently increased its revenue and profits annually, reporting about $3.7 billion in revenue and $907.7 million in net income last year. North America accounts for about 60 percent of the company’s revenue.