It was reported on today's wire services that Johnson & Johnson has been sniffing around the arbeitsgemeinschaft osteosynthesfragen in a potential blockbuster deal, that if it was to go down, would be an estimated $20 billion dollar acquisition. If capable of executing a deal of this magnitude, how would this swing the pendulum for Johnson & Johnson when it comes to their trauma and spine business units? For years now various companies have courted Synthes, only to be jilted by the girl they covet. Years ago, Zimmer sniffed the Holy Grail to no avail. Then Stryker had delusions of acquiring Synthes prior to acquiring Howmedica only to be laughed at by this smug starlet. Yes fellow bloggers John Brown and Dave Simpson thought they had an inside track, too stiff to play that riff. Johnson & Johnson attempted to get to the alter, only to be jilted. Unfortunately, they just didn't exude the love and affection that the Wyssmeister was seeking back then. Even though there is some skepticism regarding this deal, one must admit as healthy as Wyss has been, it might be time to sell Synthes and ride off into the sunset so that he could spend whatever time he has on this earth in Big Sky country, riding the range and smelling the sagebrush. So the question must be asked, will this be the blockbuster deal that everyone expected, or, is Wyss up to his old tricks in hope of driving up the price between Johnson & Johnson and whomever else is lurking in the brush. There comes a time when every cowboy must ride off into the sunset, either on his horse or lear jet, and drink the fruits of his labor at the Halter Ranch.
You know what Poco sang many years ago;
"you and I counting desert stars and lovers, one by one
While mandolins and steel guitars help our love song along
who could show you, ever know you, fall into my dream
Turn around and, then you are in cowboy boots and faded jeans
TSB wants to know DEAL or NO DEAL?
Tough to trust Wyss further than you can throw him down the stairs
ReplyDeleteI heard Ken Horton was going to buy Synthes with his "alleged" ill gotten gains.
ReplyDeleteCould NuVasive be on the verge of snapping up Trans1 and possibly one other niche MIS spine company?
ReplyDeleteNote to JnJ - before you buy this gig, take the $19B war-chest and clean your house up. Invest in it. Invest in your people instead of just lopping them off with lay-offs and early retirement programs. Get the packaging fixed. Not that tough. Get Tylenol and Motrin back on track. Please, don't buy Synthes just to ride it into the ground spending $20B in the process. You're already well on your way to riding most of your brands / divisions into the ground - starting with the spine division.
ReplyDeleteHansjorg, if you do sell, please put a couple billion into the pockets of the most loyal people that made you so much money ... the sales people! Side note - come up with a legacy transition plan rather than sell out. You don't need the money. Keep it special and get a leader in there and go kick some butt.
Wow 5:19!
ReplyDeletePointed comments but actually right on target.
Interesting comment, 5:11pm. I think people in this industry have been scratching their heads for a long time wondering why Alex still hasn't pulled the trigger on this one. Just imagine...a company that has NuVasive's XLIF solution from T1-L5 and Trans1's AxiaLIF solution from L5-S1. Forget about pricing pressure and POD's. This kind of technology cannot be easily duplicated and will protect you from the ankle-biters for a long long time.
ReplyDelete-Intrigued Investor
5:11, completely agree with your Trans 1 / NUVA marriage. If NUVA beats the street with Q1, the stock will pop just enough to warrant the currency required to but that gig for a very small premium. Its running up right now for a reason (its gone from $3.xx north of $5 today) - surely there is smart money betting on the same thing. At a $90M market cap, its not too rich (especially when you acquire a pre-FDA approved PCM disc for $70M?). Let the consolidation begin!
ReplyDeleteWhat is also interesting is to think that if the Synthes / JnJ marriage does goes through, where does that put Stryker and Zimmer? Would that be a catalyst for an all out bidding war on NUVA and put a real premium on that little monster? I know NUVA hasn't been "for sale", as they want to be the company doing the acquisition - but surely Zimmer and/or Stryker will be willing to pay a lot for NUVA during this ride down the drain.
Zimmer's buying LDR...I'll bet my POD on it.
ReplyDeleteThe old guard at Synthes is, just that, old. Wyss, Donohue, Gennett, Higgins (now retired) are the same generation and ready for the sunset. There never was a transition plan and it shows in the lousy leadership now in place. Michel was a feable attempt to bridge the gap, not because of any lack of ability, but because he had no real authority. Note to Wyss: don't micromanage a firm of Synthes' size and only work an hour an hour a month. Not that you care as there's only so much money that you can take with you.
ReplyDeleteWell said 5:19.
ReplyDeleteSay it ain't so HW.
When you look at JNJ's portfolio, it is clear how SUSA and CMF fit very nicely for them, but tell me how it makes sense on the Spine side? Other than the market consolidation to gain market share and offer even better bundling. Don't see the upside, but maybe the two pieces are enough. Guess I forgot about the newly formed Power Division (Synthes Anspach), which is a nice nugget to throw in the pot. If you read the article, they even mentioned a MSD might get in the mix. Yikes talk about two totally opposite cultures. I would like to see how that plays out!!
ReplyDeleteI'm still laughing about the fact that Zimmer will make an acquisition. Dvorak is still reeling from the Abbott fiasco. No way the Board lets him pull off a Nuvasaive acquisition. It has to be something that helps out the ortho division as well. Not ever going to happen.
ReplyDeletePlease please J&J buy the Synth, please oh please. Then just matter ot time till your sad and unhappy lads will seek us little company guys.
ReplyDeleteIf NUVA takes Trans just guess they'll come out with the 'AssVasive' retractor for maximum exposure and ribbed for a POD's pleasure!
Depuy has been trying to get to the Synthes model of direct reps for years. Once this happens they will get rid of their remaining mega distributors and put everyone on the Synthes model where no rep is allowed to earn over 250K in any given territory. At that point a new rep is placed into the area. Watch and see and get ready for some serious changes in Depuy reps across the country as they get replaced by the Synthes people who are so much better trained and work on 12% commission.
ReplyDelete513am. Doubt it. They won't get rid of performing distributors, but I bet they will move to direct in underperforming areas.
ReplyDelete5:13, I want what your smoking! Synthes spine reps are under resourced, under manned and out played. No big boy is paying 12% except the soon to be acquired Synthes. And let's be real, there will be only 2 big boys once this deal goes through.
ReplyDeleteOf course, I like my chances having my little army of spine companies with high rates.
5:13, I completely disagree! The last thing Depuy wants is 800 direct reps in a declining price market. They are buying scale to prepare for decreasing margins. They will sell thru distribution so they have a more"fixed" cost of sales. As an earlier poster noted, you are already seeing creative contracting and pricing options with regards to service (rep). They will burden distribution with managing the service piece.
ReplyDelete`
if synthes is #3 or #4 in the Spine market, and #2 buys them - isn't that an antitrust issue? wouldn't depuy be pressured to divest the spine line?
ReplyDeleteFor those on here suggesting Nuvasive acquire Trans1, that shipped set sail some time ago. With Dr. Pimenta's involvement in both companies, not to mention Rick Simmons' ties to both at the time, that deal was on the table for some quite awhile. Too bad the asking price was simply too much,, Oh, and then Pimenta's 2-level Axialif data came out ,,,, OUCH.
ReplyDeleteAnyway, Nuvasive isn't looking to acquire them as they will have the ability to address 5-1 themselves,, Also, why buy a dog like Trans-1 who has been beatin' down over & over?? If NUVA did decide to pull the trigger, it would give them XLIF, which has seen its own reimbursement challenges, along w/ Axialif which has joined the walking dead since it was assigned a Category III tracking code.
Bottom line, Alex has other things to worry about these days, namely taking his Broadway show "Memphis" to a city near you, as winning Tony Awards has clearly gone to his head. He's a business man & has learned quickly in this market that making money in the entertainment industry is clearly easier than doing so on The Street.
With a company that missed in Q3 of last year, coupled with numerous close calls over the past few qtrs.,rumor has it that Q1 for the Purple People Eaters was another one too close to call. In fact, supposedly Alex has been asking his Cheetahs to provide him w/ a list of all of the cancelled cases that they missed out on during the qtr.,, Should make for a very interesting Earnings call on 5/4.
With no insider transactions moving stock over the last 6 months, after what were routine monthly dumps & big paydays, it looks like the castle on the hill in La Jolla is for sale just like all of the other real estate in SoCal,,
You add the cash cow Anspach to JNJ you have a big winner!
ReplyDeleteThat will help my JNJ stock! Now they compete better with Medtronic and Stryker!
Winning!!
I'm not so sure how the sales model will work if this goes through. We need to remember that the CMF and trauma lines are arenas that JnJ has a vastly overmatched sales force (or nonexistant).
ReplyDelete843am: antitrust is based on share - not market position. JNJ (2) could buy #3 and 4 without violating anti-trust. They'd also still be smaller than Medtronic.
ReplyDelete8:43 - If Synthes has 68% trauma market share as it claims, isn't that an anti-trust issue...
ReplyDeletemore from 9:05!!!
ReplyDeleteAnother downfall for Johnson and Johnson ever since the hip replacement recall 2010.
ReplyDeleteThere are many cases of recall and that includes J & J for depuy hip lawsuit
ReplyDeleteIs anyone following the antitrust reviews in Europe and the US?
ReplyDeleteThe nature, scope and intensity of the reviews, and the likely divestitures, seem to be a bit more than some people expected. For example, after > 6 mos., the EC appears to have not been satisfied with JNJ's explanations or settlement offer, and thus moved its review to an even more detailed phase 2. FTC issues/concerns/conditions seem to be similar.
Is anyone following this or hearing anything they can share?