Johnson & Johnson and Smith & Nephew merger fails over CEO dispute

A proposed $34 billion merger between Johnson & Johnson’s orthopaedics division and British medical-device maker Smith & Nephew has collapsed. Despite reaching advanced stages of negotiation regarding financial terms and deal structure, the companies could not reach an agreement on leadership for the combined entity.

Johnson & Johnson reportedly sought to have Namal Nawana, president of its DePuy Synthes unit, lead the new company. Smith & Nephew chairman Rupert Soames countered by insisting that current CEO Deepak Nath retain the position. The disagreement led Johnson & Johnson to withdraw interest from the deal.

The transaction would have involved Smith & Nephew taking on approximately $10 billion in debt to fund a payment to Johnson & Johnson, helping to reconcile the valuation gap between the two businesses. Under the proposed terms, Johnson & Johnson shareholders would have held a 50.1% stake in the merged company.