The fluctuations followed reports that Smith & Nephew was the target of an offer from US pharmaceutical company Johnson & Johnson in late 2010. Under the UK Takeover Code, a target must consult with the Takeover Panel on whether to disclose if there is “an untoward movement in its share price” – with a figure of a five per cent move in one day given as guidance.
A target must also make public that a bid is on the table as soon as it is approached, unless an unequivocal denial is issued.
In that case obligation passes back to the bidder, which can continue to consider a bid unless a leak to the market forces it to disclose.
“If there’s been no announcement it could be because the bidder and target are wrangling with the Panel over where obligation lies,” said one partner at a City law firm.
But if press reports are incorrect then neither party has to issue a denial, which could explain the lack of an announcement in December, when market rumours centred on a bid by rival US orthopedic firm Biomet.
The Takeover Panel declined to comment, as did a spokesman for Smith & Nephew. Johnson & Johnson could not be reached for comment yesterday.