BRITISH medical equipment company Smith & Nephew yesterday announced the biggest UK healthcare M&A deal so far this year after striking a $1.7bn (£1bn) deal to buy US-based medicine company ArthroCare.
The business, led by Frenchman Olivier Bohuon, will pay $48.25 a share in cash for Texas-based ArthroCare, a 20 per cent premium to its usual share price over the past 90 days.
The acquisition is the third-biggest M&A deal in the UK this year behind Liberty Global’s $10bn takeover of Ziggo and Amec’s $2.7bn acquisition of Foster Wheeler, according to Thomson Reuters data.
The deal will be funded by a new $1.4bn term loan underwritten by Barclays and JP Morgan, as a well as its existing $1bn credit facility.
“With this transaction, we are again accelerating our strategy to rebalance Smith & Nephew towards higher growth,” Bohuon said.
ArthroCare, which is based in Austin, offers devices used by surgeons to do operations. It has been in the market for a buyer for a couple of years but has been stung by a long running investigation over allegations of fraud committed under a previous management team.
These were resolved early last month, leaving the company free to pursue a sale. The deal, which was signed on Sunday evening, is understood to have been in the works since last autumn. It marks another acquisition by Bohuon, who last year paid $782m to take control of another Texas-based firm, Healthpoint Biotherapeutics.
ADVISERS BANKERS LINE UP ON BIG HEALTHCARE DEALS
ANDREA PONTI (LEFT), ED BYERS & JEFF STUTE
The City’s biggest banks lined up to help arrange yesterday’s healthcare M&A bonanza. JP Morgan and Centerview Partners advised Smith & Nephew on its deal while Barclays advised beverage can maker Rexam on the sale of its healthcare units to Montagu Private Equity.
On the Smith & Nephew deal, the JPM team was comprised of Andrea Ponti, vice chairman of healthcare, Ed Byers, the head of diversified industries Europe, middle east and Africa, and Jeff Stute, head of healthcare New York. Ponti was previously a partner at Goldman Sachs, Byers came over to JPM from Cazenove and Stute has been with JPM for 18 years.
On the Rexam deal, the team was led by Barclays’ Asim Mullick, managing director of investment banking, and Andrew Owens, managing director of UK M&A advisory.
Before joining Barclays, Mullick worked at Poyry Capital. Prior to that he spent 12 years at Credit Suisse, where he headed up the European paper and packaging franchise. Owens has worked at Barclays since August 2008, prior to which he was an executive director at ABN Amro.