Valuation of J&J joint business reaches $22 billion before merger talks collapse
Key Facts
Talks to merge Smith+Nephew with Johnson & Johnson’s hip and knee unit collapsed over a dispute about who would lead the combined entity, according to a Financial Times report carried by Investing.com. The report valued the unit at up to $22 billion in a deal that would have brought together two major orthopedic surgery businesses. It attributed details of the negotiations to people familiar with the matter; the companies did not make those details public in official statements. Smith+Nephew said it declined to comment, while Johnson & Johnson could not be reached for comment, Reuters reported. The failed talks have renewed attention on the future of DePuy Synthes as Johnson & Johnson continues to consider separating it as an independent company.
The proposed deal involved more than combining operations: Investing.com reported that Johnson & Johnson shareholders would have received 51% of the combined company. Smith+Nephew was also due to pay Johnson & Johnson a distribution of about $10 billion, financed through borrowing, to bridge the valuation gap between the two sides. The terms reflected an attempt to allocate ownership and value between companies with different asset bases in the deal. But the financial agreement and ownership structure did not resolve how the new entity would be managed, according to the report, which linked the collapse to a leadership dispute. The available evidence contains no official statements from either company confirming these terms or explaining their positions on them.
The stalled talks followed another possible path for the unit. On September 11, 2026, Reuters, citing Bloomberg, reported that Apollo was negotiating to acquire Johnson & Johnson’s orthopedic surgery unit at a valuation approaching $20 billion. The report said the company could choose to separate the unit and list it as a public company instead of selling it. Johnson & Johnson therefore faced options ranging from combining the business with Smith+Nephew to selling it to a financial buyer or separating it into an independent entity. The valuation approaching $20 billion in the Apollo talks is a separate indication from the unit’s valuation of up to $22 billion in the proposed Smith+Nephew deal. Neither report announced a completed transaction, and the Apollo report did not establish that a sale was the path the company had chosen.
The unit has a substantial operating scale, generating sales of $9.3 billion in 2025 across joint replacements and surgical devices, Reuters reported. Those sales provide context for the valuations being discussed around its future, whether in a sale, a potential merger or as part of a standalone company. On October 13, 2026, Johnson & Johnson said it remained on track to separate DePuy Synthes by mid-2027 and was leaning toward making the unit an independent company, which it viewed as the best option for creating long-term value. That statement is the company’s latest disclosed position in the available record, following reports on alternative paths. It did not say that the merger talks or negotiations with Apollo had changed the target separation timetable.
Smith+Nephew reported revenue of $3.097 billion in the first half of 2026, compared with $2.961 billion in the same period of 2025. Reported growth was 4.6%, while underlying revenue growth reached 2.3%, according to the company’s results. The figures provide the company’s latest financial comparison in the available record as it explored combining Johnson & Johnson’s orthopedic surgery business into a single entity. They do not include an estimate of the proposed deal’s effect on revenue or the outcome of the negotiations. Smith+Nephew set November 4, 2026, for its third-quarter trading update, its next scheduled financial disclosure.