Smith and Nephew strides ahead on renewed Stryker bid talk
Analysts say US group could pay at least £12 a share for artificial hip and knee specialist
Analysts at Berenberg said the US group could afford to £12 a share, or possibly more for the artificial hip and knee specialist, even though it said last month it did not intend to make a bid for the business, ruling itself out for six months. However Berenberg said a deal made sense, even if it was not imminent, given other takeovers in the sector, including Zimmer's $13.35bn bid for Biomet. Smith and Nephew itself recently completed the purchase of ArthroCare for $1.5bn. Berenberg said:
[We believe] that an offer for Smith & Nephew by Stryker would make both strategic and financial sense at up to, and possibly exceeding, £12 per share. However, in our view there are notable anti- trust concerns. For this reason, we think the most likely path for Stryker to follow is to await the outcome of the Zimmer-Biomet transaction before making any decision on whether to progress with Smith & Nephew. Thus we do not expect any bid in the near term.
We believe sections of the hip, knee, joint repair and trauma/extremities markets would give rise to anti-trust concerns and likely require remedies.
For Smith & Nephew shareholders, we would advise waiting to see what materialises [from the Zimmer/Biomet situation] and perhaps consider taking some profits, but would not advocate adding to positions at this time.
However some investors do not seem prepared to wait, pushing Smith & Nephew's shares up 27p or 2.6% to £10.57.