Johnson & Johnson (JNJ) has received the much-awaited FTC approval to complete the acquisition of Swiss medical device maker Synthes. However, the approval is contingent on Johnson's selling its subsidiary DePuy orthopaedics to Biomet.

The $19.7 billion acquisition could trigger an upside for the company's stock, which recently has been grappling with a host of lawsuits related to its medical devices and diagnostics franchise.

We have a price estimate for JNJ at $74, implying a premium of nearly 15% to the current market price. We will soon be updating our model to reflect the acquisition.

Synthes acquisition to help boost growth

Synthes has a wide portfolio of medical devices for the orthopedics market, including trauma and spine. The combined J&J/Synthes orthopedic division would have the broadest orthopedic portfolio globally.

We believe the acquisition will lend support to the company's efforts to tap growth opportunities in the orthopedics market. J&J expects the trauma and knee markets to grow 7% and believes spine could rebound to a 5% rate of growth.

Further, the acquisition will also bring the Synthes's vast exposure to fast growing emerging countries including China, India and Russia.

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