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Depuy Inc. is being sold to one of the largest healthcare companies in the world - Johnson & Johnson.
The two companies announced today that Johnson & Johnson will acquire DePuy for $35 a share in a deal valued at $3.5 billion.
Johnson & Johnson will begin a cash-tender offer for all outstanding shares of DePuy beginning Monday.
At the same time, Johnson & Johnson has entered into an agreement with Roche Holding AG to acquire 84 percent of the outstanding shares of DePuy. DePuy has 99 million shares outstanding.
Roche is a Swiss pharmaceuticals giant.
Boards of directors for both companies have already approved the deal and now await clearance under federal anti-trust regulations.
DePuy is one of three major orthopedic manufacturers in Warsaw and employs more than 800 people locally. Including its subsidiaries outside of Warsaw, the company employs 1,738 people.
DePuy now joins Zimmer as being owned by a conglomerate health care company. Zimmer is owned by Bristol Myers-Squibb. Biomet is the only major orthopedic company that is locally owned.
DePuy's chairman and chief executive officer, James Lent, was scheduled to meet with employees this morning to discuss the acquisition.
"I'm sure James Lent's message to employees will be very positive," said James Goff, spokesman for DePuy.
Lent said the partnership is in the best interest of shareholders, employees and customers.
"Our tradition of innovation and excellence can only be enhanced by joining forces with Johnson & Johnson," he said.
Johnson & Johnson board chairman Ralph S. Larsen called the acquisition "a very important strategic addition to our worldwide orthopedic business."
"We are delighted that this acquisition would place the new entity in a position to become the leading company in a $9 billion orthopedic market," Larsen said.
Johnson & Johnson said DePuy will remain headquartered in Warsaw.
Furthermore, Lent and Michael Dormer, president and chief operating officer of DePuy, will be part of the management team for Johnson & Johnson Professional, the new orthopedic entity that includes Codman and Shurtleff.
"That's a recognition of the quality of our management," Goff said.
DePuy's management and much of the orthopedic industry has realized for years that it is part of "an industry poised for consolidation," and moved in that direction, Goff said.
Over the past eight years, DePuy has worked on entering new segments within the orthopedic industry that are growing faster than the implant segment and have expanded greatly beyond the U.S. market since 1990.
In recent years, DePuy has acquired a spinal implant company (AcroMed), a French orthopedic firm (Landanger), a sports medicine company (Orthopedic Technologies) a European bone cement company (CMW) and a trauma products company (Ace Medical).
In 1990, DePuy branched out into the European market with the acquisition of Charles F. Thackray.
Johnson & Johnson reported sales of $22.6 billion in 1997 and is considered to be the world's most comprehensive and broadly based manufacturer of healthcare products for consumer, pharmaceutical and professional markets.
