Smith & Nephew Plc Agrees $1.7 Billion Acquisition

smith & nephew

The shares of Smith & Nephew (LSE: SN) (NYSE: SNN.US) added 13p to 889p during early trade this morning after the medical technology firm announced a $1.7 billion acquisition.

The FTSE 100 member confirmed the acquisition of AthroCare (NASDAQOTH: ARTC.US) would add approximately $85m to annual trading profits in the third full year.

One-off expenses involved in the deal are expected to be around $100m over a three-year period.

AthroCare provides specialist medical equipment to aid both staff and patients in hospitals across the world. Smith & Nephew’s agreement involves paying $48 per share, which compares to a $45 closing price seen on Friday. During the first three quarters of 2013, ArthroCare reported sales up 2% to $276m.

Olivier Bohuon, Smith & Nephew’s chief executive, said:

“This is a compelling opportunity to add ArthroCare’s technology and highly complementary products to further strengthen our sports medicine business.”

“Together, we will be able to generate significant additional revenue from the more comprehensive portfolio, combined sales force and Smith & Nephew’s global footprint.”

Mr Bohuon is optimistic that ArthroCare’s strengths in knee repairs and shoulder anchor innovations will help drive Smith & Nephew to higher growth.

Mr Fitzgerald, chief executive officer of ArthroCare, said:

The board believes that this transaction is in the best interest of our shareholders.

Of course, whether today’s acquisition statement as well as the wider prospects for the healthcare sector both combine to make Smith & Nephew a ‘buy’ right now is something only you can decide.

But if you already own Smith & Nephew shares and are seeking alternative blue-chip investments, this exclusive wealth report provides in-depth reports on FIVE 'must-own' stocks for 2014 and beyond.

Just click here for your copy -- it's 100% free.

> Douglas does not own any share mentioned in this article.