EU opens probe into Johnson & Johnson’s Synthes buy (press release)
— EU launches investigation due to antitrust concerns
— To make a final decision on acquisition in March
BRUSSELS -(MarketWatch)- U.S. pharmaceutical company Johnson & Johnson’s JNJ -0.34% $21.3 billion bid for Synthes Inc. has been referred to a second-phase in-depth probe by the European Union’s antitrust unit, giving Brussels authorities until March to decide on the case.
In a statement issued early Friday, the European Commission said it has concerns that the proposed deal would limit competition in already “concentrated” markets.
“The proposed acquisition would remove a competitor from some markets which are already concentrated. The commission needs to make sure that effective competition is preserved, in order to maintain innovation and prevent harm to patients,” said European Competition Commissioner Joaquin Almunia
The commission has until March 19, 2012 to make a final decision. Under a second-phase procedure, it will now take fresh evidence from interested parties.
In a statement, Synthes said it had expected the EU probe because of the complexity of the deal.
“It [the launch of an in-depth investigation] has no influence on the timing of the transaction and we are working closely with the commission,” a spokeswoman said.
At 1057 GMT, Synthes shares were down CHF1.40, or 0.94%, at CHF147.40.
There was no immediate comment from Johnson & Johnson.
Both Johnson & Johnson and Switzerland-based Synthes produce or distribute trauma, spine and shoulder replacement devices, as well as devices to treat facial and skull fractures.
The commission said it is concerned that the transaction would “combine two of the leading suppliers of spine devices” and would strengthen the position of both companies in their other main markets.
The antitrust body said that could leave competitors “in many of the markets” unable “to exert a sufficiently strong restraint on the behavior of the merged entity.” It may also hurt innovation in the field, the EU said.
Synthes’ board agreed to the merger in April after deciding it faced challenges that would weigh on growth in the orthopedics-device market.
Synthes plans to hold a special meeting of stockholders on Dec. 15 in Switzerland to vote on the proposed merger.
(Jon Kamp and Goran Mijuk contributed to this article.)