Johnson & Johnson's plan for its orthopedics business was announced eleven months ago and sounded settled: separate the unit, call it DePuy Synthes, and create the world's largest pure-play orthopedics company by mid-2027. The plan now has a competitor. Apollo Global Management is in talks to acquire the unit for close to $20 billion, Bloomberg reported on Friday, and Reuters and the Wall Street Journal followed the same day. Neither company has commented, no deal is signed, and the talks could still collapse or draw another bidder. What they represent is a public choice J&J has been quietly weighing for a year: spin or sell.
The distinction matters because it decides who gets the problem of a $9.3 billion revenue business growing at barely one percent a year, and at what price.
The Unit in Question
DePuy Synthes is the largest brand in orthopedic surgery. It makes hip, knee, and shoulder implants, trauma hardware, and spinal systems, and it has been part of J&J since DePuy was acquired in 1998 and Synthes in 2012 for roughly $20 billion, then the largest acquisition in the company's history. The unit recorded $9.3 billion in 2025 sales, roughly 30% of J&J's MedTech revenue, and J&J's own separation announcement described a business serving about seven million patients a year in a global market worth more than $50 billion. J&J has sold pieces of it before: the Codman Neuro business went to Integra LifeSciences for about $1 billion in 2017.
The growth problem is in the same sentence as the scale. Revenue rose about 1.1% last year, the slowest part of MedTech, and chief financial officer Joseph Wolk has called it "a steady grower, but not outperforming." J&J's strategic language has been consistent: the company is concentrating on cardiovascular, surgery, and robotics, and orthopedics, whatever its size, does not fit the growth story.
The other shadow over the unit is litigation. DePuy's metal-on-metal hip implants produced thousands of claims, though the largest wave is largely behind it: all but 128 of roughly 10,600 ASR hip claims were resolved as of February, Reuters reported. A buyer in 2026 inherits a cleanly mapped liability picture, which is part of why a sale is discussable at all.
The market's first read was muted, which is itself information. J&J shares barely moved on the reports, closing near $265, and rose about 1.4% in premarket trading Monday. Apollo rose less than 1%. For a company of J&J's size, roughly $640 billion, a $20 billion divestiture is material but not transformative, and the spin-off announcement last October had already told investors the business was leaving.
Spin or Sale
The spin-off was announced on October 14, 2025, with a mid-2027 completion target, Citi and Goldman Sachs advising, and a seasoned executive, Namal Nawana, named to lead the standalone company. That plan remains live. The Wall Street Journal reported that J&J could still pursue a spin-off into a publicly traded company rather than a sale, and J&J's MedTech chairman told a Wells Fargo conference days before the Bloomberg report that the company would choose whichever path creates the most value.
The two paths deliver different kinds of value. A spin-off keeps J&J shareholders owning the orthopedics business in stock form, tax-efficient and reversible, with the separation cost borne by a company J&J no longer runs. A sale to Apollo converts the unit into cash at a discount to what the public markets might eventually pay, in exchange for certainty, speed, and a complete exit.
That discount is visible in the numbers. Bloomberg Intelligence estimates the business could be worth about $28 billion including debt. The talks are reported at close to $20 billion. If both figures hold, the gap is the price of certainty, and it is not small.
What Apollo Would Be Buying
For Apollo, the deal would be its largest healthcare investment to date, and it would join a run of private equity moving into medical technology at scale: Blackstone and TPG agreed to buy Hologic for more than $18 billion last year, and American Industrial Partners bought Avanos Medical in April. Medtech's appeal to private equity is structural: regulated, sticky revenue streams, aging populations driving procedure volumes, and cost discipline available in businesses that grew up inside conglomerates.
DePuy Synthes fits that playbook unusually well because it is already being prepared for independence. The separation work J&J has done, standalone financials, carve-out accounting, leadership appointments, lowers the execution risk for a financial buyer. A private equity owner would face the same slow-growth market, but with a different mandate: a conglomerate division needs to justify its growth rate to a corporate portfolio; a portfolio company needs to compound cash flow.
The parent's own results show the context for that mandate. J&J grew company-wide sales 6.6% in the second quarter to $25.3 billion, with MedTech up 4.5% to $8.9 billion, according to company figures. Orthopedics, at roughly 1% growth, is the weight dragging the average. In a portfolio where every division is asked to justify its place, the slowest grower gets sold, spun, or fixed, and J&J has now publicly tried the spin route for a year before the sale route arrived on its own.
The J&J Pattern
This is the second time in five years J&J has run this playbook. Consumer health was spun out as Kenvue in 2023, listing at a valuation above $40 billion, and Kenvue was itself then sold to Kimberly-Clark in a deal announced last year at a $48.7 billion enterprise value. The sequence, separate then sell, let J&J exit a slow-growing consumer business at a price the public markets validated first.
Orthopedics appears headed toward a faster version of the same ending: the separation was announced, the machinery was built, and before the spin could complete, a buyer arrived to offer the alternative. If Apollo closes, J&J will have turned a planned independence into cash, and the world's largest orthopedics company will never have listed. The tax treatment of the two paths differs, which is why the choice is a CFO's decision as much as a strategist's: a spin can be structured tax-free for shareholders, while a sale produces a tax bill J&J will weigh against the certainty of cash.
What to Watch
The talks are described as private and advanced enough that an agreement could come within weeks, but the usual escape hatches remain open: rival private equity firms have shown interest, a strategic device maker could enter, or the companies could return to the original spin plan. J&J's stock barely moved on the reports, which is the market's way of saying the outcome was already one of two announced possibilities.
The market has also had months to price the possibility. Reuters reported as far back as February that J&J was preparing a possible sale of the orthopedics unit that could top $20 billion, with private equity firms seen as the likeliest buyers, and that several large firms might team up on a bid. What is new in September is not the direction but the name: Apollo, in exclusive-sounding talks, at the price level the February reporting floated. The long leak pattern suggests a process that has been deliberate, competitive, and slow, which is how a company extracts value from a business it announced it was leaving a year ago.
The number to watch is the price, not the path. If the unit sells near $20 billion against a $28 billion independent valuation estimate, the deal will be read as J&J paying for certainty. If the price drifts up, the gap closes and the choice gets easy. Either way, one of the steadiest businesses in American healthcare is about to change owners, and the only question left is which kind of owner it gets.
There is a third audience for the outcome: the patients with J&J hardware already in their bodies, and the surgeons who install more of it every day. For them the ownership question is not about tax structure but about continuity, and the reassuring fact is that orthopedics does not change hands quickly even when its owner does. The implants, the instruments, and the hospital contracts carry over. What changes is the pressure behind the business: from a conglomerate asking why it is not growing faster, to an owner asking how much cash it can generate. Both pressures shape a product. Only one of them will shape DePuy Synthes next.
The people question is the same question. J&J installed Namal Nawana, an experienced device-industry executive, to lead the standalone company, and a sale would hand Apollo a management package assembled for independence. Private equity deals of this size live or die on whether the operators stay, and the reported pace of the talks suggests both sides are already past that conversation. The name on the building will change. The people deciding how the hips and knees get made may not.
Primary sources
- Bloomberg, "Apollo Global Is Said in Talks to Acquire J&J's Orthopedics Unit" (Sept. 11, 2026), for the talks and the reported valuation level.
- Reuters, "Apollo Global in talks to acquire J&J's orthopedics unit, Bloomberg News reports," for the talks' status and the competing bidders.
- Johnson & Johnson, announcement of intent to separate the Orthopaedics business (Oct. 14, 2025), for the spin plan, the unit's figures, and the mid-2027 timeline.
- The Wall Street Journal, as summarized by trade press, for the spin-off alternative and the MedTech chairman's comments.
- Reuters, for the ASR hip litigation resolution status and the February sale exploration report.