US Zimmer deal boosts Smith & Nephew shares

Julian Harris
Follow Julian
SHARES in Smith & Nephew jumped over three per cent yesterday following the buy-out of a group that tried to buy the British health firm back in 2011.

New York-listed Zimmer revealed that it is snapping up rival US orthopaedic company Biomet for $13.35bn (£7.95bn).

The deal has added more weight to a widely-held view among investors that Smith & Nephew, a health products manufacturer that has its roots in the north-eastern city of Hull, is set to become a takeover target.

Trading volume in the company rose to around four and a half times its 90-day average to close up 3.35 per cent in London, to 909p.

Meanwhile across the pond, Zimmer’s share price soared 11.5 per cent to close at $101.97.

The acquisition is the latest in a run of healthcare industry deals that have lit up stockmarkets following the Easter break.

UK and Swiss pharmaceuticals giants Glaxosmithkline and Novartis revealed on Tuesday an agreement to trade over $20bn worth of assets.

And on the other side of the Atlantic, Canadian company Valeant Pharmaceuticals International said that it and activist investor Bill Ackman have made an unsolicited $47bn bid to buy Allergan, the firm famed for producing Botox.

Yesterday Zimmer boss David Dvorak talked up his firm’s deal. “Biomet is a perfect fit for us,” he said. Jefferies analyst Raj Denhoy agreed: “The financial aspects of it are hard to find fault in. In healthcare, being a larger company that has a broader product offering seems to be the way that things are evolving. You’re selling to hospitals as opposed to individual surgeons and having that larger footprint is believed over time to be important.”

Biomet has been a private company since 2007 when it was bought by a private equity consortium that included Blackstone and KKR.

Related articles