The number that keeps coming up in investment committee conversations this week is not $20 billion. It is 2.15 times revenue. That is the rough multiple Apollo Global Management is reportedly willing to pay for DePuy Synthes, J&J’s orthopedics unit, which generated $9.3 billion in sales in 2025. The multiple sits well above where public pure-play orthopedics companies trade today. Zimmer Biomet, for instance, generated about $8.23 billion in 2025 revenue and carries a market capitalization of roughly $18.5 billion, implying a lower revenue multiple despite stronger recent growth. That gap is the debate.
The transaction would be a very large healthcare buyout for Apollo if completed. For institutional investors sizing up both sides of this trade, that fact is almost secondary. What matters is whether a deal of this scale can actually be financed. Leverage in today’s large-cap LBO market is generally lower than the 2021 peak, but deal-by-deal outcomes vary widely. On a business that J&J’s CFO has characterized as steady but not the fastest-growing part of the portfolio, lenders will want to see durable cash flow before agreeing to underwrite the debt tranche. Mega deals will increasingly rely on hybrid financing, combining syndicated loans and private credit, which likely means Apollo shops the paper across both markets simultaneously.
Why Wall Street Cares
J&J announced plans in October 2025 to separate DePuy Synthes into a standalone company, saying it wanted to sharpen its focus on higher-growth segments. On its Q2 2026 earnings call, CFO Joseph Wolk said the company continues to evaluate all separation options that create shareholder value and reiterated that a mid-2027 separation timeline remains intact. The optionality built into that language, spin versus sale, has been the central question for J&J shareholders all year. A signed deal with Apollo resolves it fast and in cash.
The business is profitable but growing more slowly than the cardiovascular, surgery, and vision lines J&J wants to emphasize following recent acquisitions, including Abiomed and Shockwave Medical. That strategic logic is not controversial. What is being debated is whether the sale path unlocks more value than a tax-free spin, and whether the $20 billion figure holds up once financing terms are set.
The Bull Case
Sellers of the bull argument for JNJ point to immediate balance sheet impact. A $20 billion cash receipt, net of taxes and separation costs, funds buybacks, pipeline acquisitions, or both. J&J has said DePuy Synthes would be the largest, most comprehensive orthopaedics-focused company in the world if it becomes a standalone entity, which means the unit carries genuine strategic scarcity value for Apollo. A buyer cannot assemble comparable hips, knees, and trauma scale anywhere else in one transaction. That scarcity, combined with aging demographics driving procedure volumes, supports the price.
For APO shareholders, the attraction is a long-duration cash-generative asset with predictable volume tailwinds. The global orthopedic implants market is projected to grow to $26.47 billion by 2029 from $20.94 billion in 2024, at a compound annual growth rate of 4.8%. That is not a hypergrowth story, but it is exactly the steady-yield profile Apollo historically targets in large carve-outs.
The Bear Case
The financing question is where skeptics push back hardest. Credit market headwinds this year, including geopolitical disruption and an AI-fueled reassessment of credit quality, have been cited by market commentators as contributors to a 22.5% year-over-year decline in overall institutional leveraged loan value in Q1 2026. A $20 billion carve-out requiring a debt tranche in the range of $10 to $12 billion is not a middle-market transaction. It tests capacity.
There is also a competitive dynamic to watch. DePuy Synthes has drawn interest from several private equity firms. A bidding war would push the price higher but compress Apollo’s return. And any meaningful leverage on a business growing at low single digits annually leaves limited cushion if procedure volumes soften, which tariff costs are already pressuring across the industry. Stryker has said its 2026 guidance assumed roughly $400 million of tariff-related cost headwind, although subsequent developments have partially offset that impact.
What Investors Are Missing
The more interesting read-through is not for J&J or Apollo. It is for Zimmer Biomet and Smith+Nephew. A successful $20 billion private sale of DePuy sets a new private-market valuation floor for pure-play orthopedics assets and makes those public companies look cheap by comparison. Zimmer in particular, trading at a market cap below the DePuy sale price on comparable revenue, becomes a more obvious rerating candidate the moment this deal closes. Sophisticated investors are already mapping that arbitrage.
J&J could also opt to spin off the business as a publicly traded company rather than pursue a sale, which would create a different kind of comparable, a listed standalone orthopedics pure-play at the scale that no public company currently matches. Either outcome resets the sector.
Stocks to Watch
- JNJ: The sum-of-parts case sharpens materially if a $20 billion cash exit is confirmed. Recent analyst updates have pushed some fair value and price target estimates higher, reflecting Q2 momentum and greater clarity around strategic options.
- APO: This deal would test Apollo’s ability to finance at scale in a tighter credit environment, making execution the stock-level story rather than the announcement itself.
- ZBH: The most direct read-through beneficiary of a DePuy valuation benchmark. Zimmer trades at a market cap below the reported DePuy price on similar revenue, a gap that gets harder to justify once private buyers put a public number on the sector.
- SYK: Stryker carries the strongest robotics position in orthopedics via its MAKO system, which insulates it from competitive pressure a standalone DePuy might eventually apply. Worth watching as the quality compounder in a sector that just got a valuation anchor.
- SNN: Smith+Nephew is the smallest of the major pure-plays and the most obvious M&A target if the DePuy transaction validates big-ticket orthopedics deal-making. Any spike in its shares on deal speculation deserves scrutiny.
