JNJ Gets FTC Approval For Synthes Acquisition - Update

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6/12/2012 6:51 PM ET

Johnson & Johnson (JNJ: Quote) said Tuesday it received U.S. regulatory approval for the $19.7 billion acquisition of Swiss medical device maker Synthes Inc., thereby capping all clearances needed to close the transaction.

JNJ expects to close the transaction on June 14, 2012, subject to customary closing conditions.

The proposed deal was cleared by the European Commission last April. The deal was approved by the U.S. Federal Trade Commission on Monday, subject to the condition that DePuy Orthopaedics Inc., an unit of JNJ, will divest its trauma business to Biomet Inc.

To finance the transaction, JNJ's unit Janssen Pharmaceutical has entered into accelerated share repurchase (ASR) agreements with Goldman, Sachs & Co. and JPMorgan Chase Bank N.A. to purchase over 203 million shares of JNJ stock borrowed from stock lenders for $12.9 billion. This along with cash held by Janssen will be used to provide funds for the transaction.

JNJ expects the acquisition to be accretive to 2012 adjusted earnings by about $0.03 to $0.05 per share, compared to its earlier estimate of $0.22 per share. The company said the current estimate reflects a mid-year 2012 closing date as well as current sales estimates for the combined orthopedics business.

JNJ also expects to record after-tax items for the balance of 2012 consisting of acquisition-related charges of over $1 billion. In 2013, the first full year of the combined businesses, the transaction is anticipated to be accretive to adjusted earnings per share by $0.10 to $0.15.

JNJ in April 2011 agreed to acquire Pennsylvania-based Synthes, a maker of skeletal treatment devices in North America. Upon completion of the deal, Synthes will be combined with J&J's orthopedics business DePuy.

The J&J-Synthes deal is one of the major acquisition by an healthcare company in recent years. J&J in 2006 bought Pfizer Inc.'s (PFE) consumer health unit for $16.6 billion.

JNJ closed Monday at $63.08, up $0.96 or 1.55,% on a volume of 26.5 million shares on the NYSE. On the Swiss Exchange, Synthes closed at 158.30 Swiss francs, up 0.32%.

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