J&J and Smith+Nephew Had a $34 Billion Ortho Deal on the Table. Then They Couldn’t Agree on a CEO.
J&J and Smith+Nephew Had a $34 Billion Ortho Deal on the Table. Then They Couldn’t Agree on a CEO.
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According to a report out of the Financial Times this morning, Johnson & Johnson and Smith+Nephew came close to combining their orthopedics businesses into a $34 billion company. The deal fell apart because neither side would give up the CEO seat.
The money was already settled. J&J shareholders would own 50.1% of the combined company. Smith+Nephew shareholders would hold the rest. Smith+Nephew would pay J&J about $10 billion, funded with debt. The deal valued J&J’s ortho business, DePuy Synthes, at up to $22 billion. That is nearly double what Smith+Nephew itself is worth today at roughly $12.6 billion.
Then came the question of who runs it.
J&J wanted Namal Nawana. He has led its ortho business since 2025. Smith+Nephew wanted Deepak Nath, its CEO since April 2022. Chair Rupert Soames, who would have chaired the combined board, told J&J that Nath in the top job was not up for discussion (according to people who spoke with the FT). Talks ended a few weeks ago. The two companies had been aiming to announce the deal in mid-October.
The history here is hard to miss. Nawana spent 15 years at Johnson & Johnson early in his career, including serving as Worldwide President of DePuy Synthes Spine (departing in 2012). He was CEO of Smith+Nephew for about 18 months before leaving in late 2019. When J&J announced in 2025 that it planned to separate its ortho business, it named Nawana to lead it the same day.
Nath came to Smith+Nephew from outside orthopedics. He joined in April 2022 from Siemens Healthineers, where he ran the $6 billion diagnostics business, after a decade in various roles within Abbott. He was Smith+Nephew's fourth CEO in five years and has spent his tenure on a turnaround plan. The numbers have moved: revenue grew from roughly $5.2 billion in 2022 to $6.2 billion in 2025, and operating margin climbed from 8.6% to 12.9% over the same stretch.
J&J has been shopping the unit for over a year. Bloomberg reported earlier this year that J&J was looking for a deal north of $20 billion. Last month, Bloomberg reported J&J had talked with Apollo Global Management about selling all or part of the business.
On J&J’s third quarter earnings call on October 13, CFO Joseph Wolk said the company was leaning toward a spin. He pointed to how DePuy Synthes is performing under Nawana. Per the FT, that is now the direction J&J is headed: a standalone, publicly listed ortho company.
The takeaway is this: two of the biggest names in orthopedics agreed on $34 billion worth of terms and still walked away over one hire. One side had a trusted leader with deep orthopedics roots. The other had a turnaround CEO it was not ready to give up. Leadership is the deal.
Author
TH
TJ Halvorson
The De Angelis Group | Orthopedics This Week | MSK Innovations
Why This Matters
Two Perspectives
MBA Lens: Economic and industry impact
A potential $34 billion orthopedic merger between Johnson & Johnson's DePuy Synthes and Smith+Nephew collapsed due to an inability to agree on CEO leadership. This strategic failure highlights the critical role of executive control in large-scale M&A, even when financial terms are settled. J&J is now pivoting towards a spin-off, indicating a shift in its orthopedic market strategy.
- The proposed deal valued J&J's orthopedic unit at up to $22 billion, significantly impacting market structure.
- Smith+Nephew's CEO, Deepak Nath, demonstrated revenue and margin growth, reinforcing their commitment to current leadership.
PhD Lens: Clinical and outcomes impact
The article details a failed $34 billion merger between Johnson & Johnson's DePuy Synthes and Smith+Nephew's orthopedic divisions, primarily due to leadership disagreements. This business decision-making process did not involve discussions on specific orthopedic product mechanisms, materials science innovations, or clinical evidence. The focus remained on corporate structure and executive appointments rather than scientific or clinical advancements.
- The proposed combination aimed to consolidate major orthopedic market players, without detailing specific technology synergies.
- Leadership backgrounds mentioned include experience in spine and diagnostics, but no direct clinical or research implications are discussed.
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Discussion
This is a fascinating development. In my practice we've seen similar outcomes with the revised protocol. The key differentiator seems to be patient selection criteria. Has anyone else noticed the correlation with BMI thresholds?
Great point. I'd push back slightly on the conclusion, the sample size in the cited study is too small to draw population-level inferences. That said, the directional signal is compelling and worth a larger RCT.
We implemented a similar approach last year. Early results are promising but we're still gathering 12-month follow-up data. Happy to share our protocol if anyone is interested.
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