A proposed $34 billion merger between Johnson & Johnson’s orthopaedics business and Smith & Nephew would have involved approximately $10 billion in debt financing from the British medical-device maker while giving J&J shareholders 50.1% of the combined company, according to the Financial Times.
The financing component was more than three times Smith & Nephew’s $3.02 billion in net debt as of June 27, 2026.
Under the terms described by the outlet, the borrowing would have funded a roughly $10 billion payment to J&J, helping reconcile the businesses’ differing valuations. J&J’s orthopaedics operation was valued at up to $22 billion, compared with Smith & Nephew’s market capitalization of approximately $12.6 billion cited in the reporting.
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Smith & Nephew’s latest published results show the financial scale involved. At the end of the first half, the company reported a net-debt-to-adjusted-EBITDA ratio of 1.8 times and free cash flow of $231 million, down from $244 million a year earlier.
In August, it maintained its full-year free cash flow forecast of approximately $800 million while reducing expected underlying revenue growth to around 4% from around 6%. The proposed $10 billion borrowing was equivalent to 12.5 times that standalone annual cash flow forecast, before accounting for earnings, borrowing costs, or other financial effects of a combined business.
Leadership stopped the talks
Despite reported agreement on the transaction’s principal economics, the merger discussions broke down over management. The FT reported, citing people familiar with the negotiations, that J&J wanted DePuy Synthes president Namal Nawana to lead the combined company.
Smith & Nephew chairman Rupert Soames instead insisted that incumbent chief executive Deepak Nath retain the position, according to the report.
Nawana previously served as Smith & Nephew’s CEO, departing in 2019 amid a compensation disagreement. J&J had publicly designated Nawana as the expected leader of DePuy Synthes when it announced plans to separate the orthopaedics business in October 2025. The division generated $9.3 billion in sales in 2025, according to J&J’s financial results.
On October 13, J&J CEO Joaquin Duato said the company was leaning toward spinning off DePuy Synthes as a standalone company, with separation targeted for mid-2027.
