Friday November 28, 2014

J&J wins EU approval for Synthes acquisition

Johnson & Johnson won approval from the European Commission for its $21.3 billion purchase of Synthes after agreeing to sell its European trauma business.

Bloomberg is reporting that “Johnson & Johnson won European Union approval for its $21.3 billion purchase of Synthes after agreeing to sell its European trauma business to allay antitrust concerns.” According to the European Commission, J&J’s offer to dispose of operations making devices that treat bone fractures eliminated antitrust concerns over “very high combined market shares” for the products. J&J ranks as the world’s second-biggest seller of health products. In April 2011, it offered to acquire Pennsylvania-based Synthes for 159 Swiss francs a share in cash and stock. “The Brussels-based regulator opened an expanded probe in November into the deal,” Bloomberg notes, “citing concerns that the transaction would trigger an increase in prices for orthopaedic medical devices.”

The Wall Street Journal further reports that the competition Commission determined that the proposed merger would not negatively impact competition. The European Union’s competition watchdog issued a statement that read: “The commission’s investigation confirmed that, subject to the divestment of Johnson & Johnson’s trauma business, the merged entity would continue to face competition from a number of other strong competitors and that customers would still have sufficient alternative suppliers in all of the markets concerned.”

Separately, Business Week has learned that “Human Genome Sciences rejected an unsolicited offer from GlaxoSmithKline PLC, its partner on the lupus treatment Benlysta, to buy the company for about $2.59 billion.” The $13-a-share cash offer represents an 81 percent premium to Wednesday’s closing stock price of $7.17. Maryland-based Human Genome states that its board of directors has approved an “exploration of strategic alternatives in the best interests of shareholders, including, but not limited to, a potential sale of the company.” Benlysta was approved by regulators in the United States and Europe in 2011 as the first drug designed specifically for lupus, an incurable condition that afflicts around 5 million people worldwide.

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