How a transatlantic mega-merger fell apart over a leadership tug of war
A planned combination of J&J's orthopaedics business (formerly DePuy Synthes) and Smith & Nephew, which would have created a $34bn company, collapsed at the last minute several weeks ago over who would run it, according to people familiar. S&N refused J&J's pick, Namal Nawana, S&N's former CEO (who left in 2019 after 18 months over pay) and now head of J&J orthopaedics. S&N insisted that CEO Deepak Nath stay, and chair Rupert Soames made it a red line. S&N approached J&J earlier this year. Terms: J&J orthopaedics valued at up to $22bn against S&N's £9.4bn ($12.6bn) market cap; J&J shareholders would own 50.1%; S&N would pay J&J a debt-funded dividend of about $10bn; the combined group would probably elevate its US listing while keeping London. A mid-October announcement had been targeted. Last week J&J CFO Joe Wolk said J&J is 'leaning towards' spinning off the unit (orthopaedics sales +3.2% in the quarter). S&N is under pressure from activist Cevian; its shares are down 21% in 12 months against a 13% rise in the FTSE 100, and Nath has rejected a break-up. Nath's maximum pay rises to $15.3mn from 2027 (from $7.2mn), after a 2024 shareholder revolt. Both companies declined to comment. Caveats: anonymous sourcing; with J&J leaning to a spin-off, the deal may be dead.
Why it matters
A $34bn transatlantic medtech deal died over the CEO seat, not price. It shows governance and executive pay deciding big European M&A, and London's pull versus a US listing (the merged group would have elevated its US listing). With J&J now leaning to a spin-off and Cevian pressing S&N, more medtech M&A or break-up activity is likely.
