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
- How to invest for income and growth: SAINTS' James Dow
- Mini Cooper SE: The British icon gets an all-electric makeover
- BMW meets Swarovski and releases BMW i7 Crystal Headlights Iconic Glow
- Mail Online takes a tour of Gatwick's modern EV charging station
- 2025 Aston Martin DBX707: More luxury but comes with a higher price
- Land Rover unveil newest all-electric Range Rover SUV
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- Tesla unveils new Model 3 Performance - it's the fastest ever!
- Mercedes has finally unveiled its new electric G-Class
- Mini celebrates the release of brand new all-electric car Mini Aceman
- Blue Whale fund manager on the best of the Magnificent 7
- 'Now even better': Nissan Qashqai gets a facelift for 2024 version
- Don't ditch name and shame plan - it has the City running...
- Are you a Wetherspoon lover or hater? LEE BOYCE and SIMON...
- Avon Protection handed £38m gas mask contract by MoD
- Bank of England holds rates at 5.25% AGAIN - what it...
- Millions kept in the dark over City watchdog's mystery...
- TSB to close one in six branches: More than 6,000 shut by...
- ITV hit by Hollywood strikes as it pins hopes on Euros...
- Hedge fund tycoon's £34m silver salvage claim sunk at the...
- Watches of Switzerland buys Italy's Roberto Coin for £104m
- Snoop Dogg cannabis firm to ditch London after losing 97%...
- BAE Systems tools-up for growth as Britain plots defence...
- MARKET REPORT: IAG leads Footsie higher as airline shares...
- Oil industry engineer Wood Group rejects £1.4bn Dubai...
- Controversial Brewdog founder James Watt steps downs
- We do need to resolve inequality admits £8m-a-year...
- Drivers abandon Direct Line after insurance premium hikes
- Ford boss says it may restrict petrol models in the UK to...
- Spring property bounce is a damp squib - Rics estate...