Smith & Nephew Stock Up Amid More Merger Rumors

Chris Newmarker

December 18, 2015

2 Min Read
Smith & Nephew Stock Up Amid More Merger Rumors

Oh, the rumors. Smith & Nephew is enjoying some year-end recovery to its stock price amid more talk about Stryker acquiring it.

Qmed Staff

Smith & Nephew's stock shot up nearly 5% in value, to 1172 pence, on the London Stock Exchange on Friday, amid talk of a renewed effort by Stryker to acquire the British medical device maker.

The rise, which nearly erased S&N stock losses for the year, came after a StreetInsider story that quoted a "person with knowledge of the situation" saying that Stryker had tabled a $18 billion offer. StreetInsider said spokespeople from both companies declined to comment.

Speculation has now been going on for years that Stryker or some other large medical device maker is going to acquire S&N as part of the spate of megamergers sweeping the medical device industry.

Smith & Nephew CEO Olivier Bohuon has shown himself to be pretty shy of megamergers. "It has disrupted our sales force because every day they are with [competitors] who are saying, 'By the way, we are going to buy you'," Bohuon told The Financial Times in an article published in October.

Bohuon has instead focused on organic growth in faster growing areas, such as redirecting the company's emphasis on hip and knee replacements toward innovations in one of its oldest businesses--wound care. S&N has also supplemented such growth with smaller acquisitions, such as the $1.5 billion takeover of Austin, TX-based sports medicine device maker ArthroCareCorp. last year.

Currency exchanges, though, have caused trouble for S&N. For the quarter ended October 29, revenue was down 4%; it would have been up if not for currency headwind.  

The situation meant Smith & Nephew's stock was down 8% for the year, as of early December, making it one of the worst performing of the major medical device companies. With the renewed merger talk, though, S&N is now only down by more than 1%. 

Chris Newmarker is senior editor of Qmed and MPMN. Follow him on Twitter at @newmarker.

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