Smith & Nephew spend $1.7bn on well-timed ArthroCare buy (Evaluate Group)
Smith & Nephew's $1.7bn cash purchase of a sports medicine specialist, ArthroCare, means that the orthopaedics giant has made good on its promise to diversify into high-growth areas.
The UK firm says that ArthroCare’s radiofrequency-based surgical technology will mesh with its range of mechanical saws and enable it to treat patients’ shoulders as well as strengthening its knee repair business. The ortho market is enjoying a remarkable resurgence at the moment on the back of improving overall employment rates, thanks to the elective nature of hip and knee replacement procedures, and this deal could help S&N make the most of it.
Reasonable
It is probable that ArthroCare caught S&N’s eye when it reached an agreement with the US Department of Justice last month that resolved a criminal case concerning alleged securities fraud. At the time, analysts at Jefferies and Canaccord Genuity said the company would make an attractive takeover target, and put the likely price at $47-55 per share. The S&N deal comes in at $48.25 per share.
This price tag represents a 20% premium over the 90-day average sh...
