Key Moments
- Advanced merger talks between Smith & Nephew (LSE:SN) and Johnson & Johnson’s orthopaedics division reportedly broke down over who would lead the combined business.
- The proposed transaction would have valued J&J’s hip and knee replacement unit at up to $22 billion, versus Smith & Nephew’s £9.4 billion ($12.58 billion) market capitalization.
- J&J has announced plans to spin out its orthopaedics business as DePuy Synthes in October 2025, with the unit previously reported to be seeking a $20 billion valuation.
CEO Dispute Ends Near-Complete Deal
Oct 23 (Reuters) – Negotiations between Smith & Nephew and Johnson & Johnson aimed at combining the UK-listed medical device maker with the U.S. group’s orthopaedics division collapsed after a dispute over the chief executive role, the Financial Times reported on Friday, citing people familiar with the matter.
According to the report, discussions had progressed to an advanced stage, with both parties in agreement on the principal financial terms and overall transaction structure. However, the talks reportedly unraveled at the final stage when the two sides could not reach consensus on who would lead the enlarged entity.
Role of Former CEO at Center of Conflict
The Financial Times reported that the combined business would have been led by Smith & Nephew’s former chief executive Namal Nawana, a condition that the London-listed company declined to accept. Nawana left Smith & Nephew in 2019 after around 18 months in the top role because the company was unable to meet his compensation expectations, the report said.
Instead, Smith & Nephew reportedly insisted that it would only proceed with the merger if its current chief executive Deepak Nath remained in the CEO position, the FT reported.
Silence From Companies as Valuation Details Emerge
A spokesperson for Smith & Nephew declined to comment on the report, while Johnson & Johnson could not be immediately reached outside of business hours, according to the article.
The proposed deal would have assigned a valuation of up to $22 billion to Johnson & Johnson’s hip and knee replacement business, nearly twice Smith & Nephew’s £9.4 billion ($12.58 billion) market capitalization, the FT reported.
| Item | Value |
|---|---|
| Proposed valuation of J&J hip and knee unit | $22 billion (maximum) |
| Smith & Nephew market capitalization | £9.4 billion ($12.58 billion) |
| Reported target price for orthopaedics unit | $20 billion |
| FX rate used | $1 = 0.7470 pounds |
Spin-Off Plans and Private Equity Interest
Johnson & Johnson has previously announced plans to separate its orthopaedics business into an independent company to be called DePuy Synthes in October 2025. The orthopaedics unit, which was reportedly seeking a $20 billion price tag, has attracted interest from private equity firms, but no transaction has been completed so far, the report added.
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