According to a report in WSJ, Johnson & Johnson is in talks
to buy U.S.-Swiss medical-equipment maker Synthes Inc. in a deal that could be valued at around $20 billion, according to people familiar with the matter. Should the two sides reach an accord, it would rank as one of the biggest health-care takeovers in recent years.
Synthes makes equipment that is used to treat spinal injuries, a business that is more resistant to external pressure than one revolving around more elective procedures.
We haven’t liked JNJ for a long time for a number of non-financial reasons. We think their management is inattentive to manufacturing processes at best, sloppy at worst.
But we really don’t like mergers and acquisitions as a way to make a company look bigger. They haven’t invented a product, or developed a drug, they just bought somebody who did. What do you think will happen to their management? The ones who actually developed these products?
The deal may fall through. Let’s hope it does. Those Swiss are smart cookies! Surely they can find a better company to partner with.