Festive cheer for Smith & Nephew as shares jump on revived speculation of takeover move by US peer Stryker
Investors in replacement hip and knee firm Smith & Nephew got an early Christmas present today as the blue chip firm’s shares jumped on revived speculation that US rival Stryker is planning a takeover bid.
Smith & Nephew, which employs 11,000 staff in more than 90 countries, saw its shares climb more than 8 per cent higher as Bloomberg reported that Stryker may launch a bid within weeks.
According to the newswire report, Stryker plans to offer a significant premium to Smith & Nephew's current share price, with one of the people familiar with the prospective deal saying it could be about 30 per cent.
Knees up: Smith & Nephew specialises in sports medicine, treatments for trauma and wound management as well as joint replacement
In late morning trade, Smith & Nephew stock was up 80p to 1,169p, giving it a market value of around £10.5billion. Share trading in London will finish at 12.30 pm today ahead of the two-day Christmas break.
Tony Cross, market analyst at Trustnet Direct said: ‘These latest gains have propelled the stock to one of the best performers in the FTSE 100 this year, although that does mean failure to see the deal progress comes with some impressive downside, too.
‘If nothing else, this offers at least a degree of excitement in what could otherwise be a somewhat uninspiring session.’
Talk of Stryker's interest in the FTSE 100 business has come up before, and in May the US firm was forced to issue a statement saying it was not bidding for the UK firm. Under UK competition rules this formally precluded it from making a bid for Smith & Nephew for six months.
Smith & Nephew specialises in sports medicine, treatments for trauma and wound management as well as joint replacement.
In October, the UK firm reported a nine-month trading profit up 1 per cent to £695million on sales 2 per cent higher at £3.2billion.
Michigan-based Stryker is not expected to bid for Smith & Nephew as part of a tax saving scheme, called an inversion plan. This is because the US Government is clamping down on those types of deals to stop companies from moving their bases abroad to cut taxes.
Such schemes came under the spotlight earlier this year when US drug company Pfizer launched a controversial £76billion approach for Anglo-Swedish rival AstraZeneca, which the UK-listed firm rejected in May.
Pfizer have could returned with another bid for AstraZeneca in November but some analysts believe the US firm is unlikely to pursue Astra again having seen its plans for a tax inversion deal scuppered.
A move by US firm AbbVie for fellow UK pharma blue chip Shire was pulled by the predator back in October because changes to Irish tax rules and moves by the US to clamp down on tax dodging firms put paid to its money-saving ambitions.
AbbVie had been planning to slash its tax bill by 40 per cent through the deal by relocating its tax base to Ireland and registering its headquarters in Jersey.
It is understood that a bid by Stryker for Smith & Nephew is still being finalised and the timing could change. There is also a possibility that Stryker could decide against making an offer for the company.
Analysts and bankers have speculated for years that the British company could be an attractive takeover target for a company such as Stryker.
Jasper Lawler. market analyst at CMC Markets UK said: ‘Stryker must feel there are enough synergies between the companies that the deal is still worth doing without the tax advantages of an inversion.
'Stryker’s motives are likely also slightly defensive in nature since the deal follows another mega-merger between medical device-makers Medtronic and Covidien.’
Smith & Nephew was founded by Thomas James Smith in 1856 who opened a small family pharmacy in Hull. It first listed on the stock market in 1937 and joined the FTSE 100 Index in 2001.
Most watched Money videos
- German car giant BMW has released the X2 and it has gone electric!
- The new Volkswagen Passat - a long range PHEV that's only available as an estate
- Mini unveil an electrified version of their popular Countryman
- How to invest to beat tax raids and make more of your money
- BMW meets Swarovski and releases BMW i7 Crystal Headlights Iconic Glow
- MG unveils new MG3 - Britain's cheapest full-hybrid car
- Iconic Dodge Charger goes electric as company unveils its Daytona
- MailOnline asks Lexie Limitless 5 quick fire EV road trip questions
- Paul McCartney's psychedelic Wings 1972 double-decker tour bus
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- BMW's Vision Neue Klasse X unveils its sports activity vehicle future
- 'Now even better': Nissan Qashqai gets a facelift for 2024 version
- Boomtime for businesses as the UK economic recovery is...
- Tesla to lay off more than 6,000 staff as Elon Musk's...
- Petrol surpasses 150p a litre - cost of filling up is now...
- Minister rebuke 'woke' investors for shunning the UK's...
- MARKET REPORT: Weak metal prices drag FTSE miners into...
- Housebuilder Taylor Wimpey cheers green shoots of spring
- Why Virgin Money takeover may mean better rates for...
- Thames Water customers face huge increase in bills
- Are you a backseat driver? The 20 telltale signs you're a...
- AB Foods shares soar as Primark owner eyes 'significant...
- UK grocery price inflation falls for 14th consecutive month
- BUSINESS CLOSE: FTSE 100 hits new record high; UK...
- Royal Mail's £5 fines are a cynical way of making...
- Electric Range Rover revealed during Arctic Circle...
- Bereaved families paid a record £7.5bn inheritance tax...
- THG sales accelerate amid strong demand for beauty products
- How do I claim for pothole damage to my car on a private...
- Our friends wriggle out of paying their fair share on...