Smith & Nephew Still Entices as Regulators Loom: Real M&A (Bloomberg)
A deal between Stryker Corp. (SYK) and Smith & Nephew Plc (SN/) makes as much sense now as it did six months ago. It just might be tougher to pull off.
Stryker is considering structuring the takeover as a tax inversion, allowing the Kalamazoo, Michigan-based company to move its legal address to the U.K., where Smith & Nephew is based. The $16 billion-plus transaction would give Stryker future access to the cash it’s been accumulating overseas without being hit by repatriation taxes. Even without an inversion structure, the deal would offer benefits and may help the businesses gain back pricing power after hospital consolidation squeezed margins at orthopedic-implant makers.
The challenge is that Stryker’s competitors had a similar idea and moved more quickly. Zimmer Holdings Inc. agreed in April to buy Biomet Inc. for $13.4 billion, which will reduce the orthopedic-reconstruction market to four major manufacturers from five. It will be harder for Stryker, which has been barred from making an offer since May under U.K. takeover rules, to make the case to antitrust regulators for further consolidati...
