Smith & Nephew Acquire ArthroCare in USD 1.7 billion All-Cash Deal

Published Date : Feb 03, 2014

Smith & Nephew, a leading manufacturer of artificial joints has announced its decision to buy the Texas-based medical devices company ArthroCare in a USD 1.7 billion deal. The cash deal is a step towards helping Smith and Nephew boost its sports medicine business further.

Smith and Nephew, a FTSE 100 company, has said that it will be executing the deal with a payment of USD 48.25 per share. This translates into a 20% premium over and above ArthroCare’s 90-day average prices. It is also a 6.3% increase over ArthroCare’s Nasdaq closing price on Friday.

According to officials from Smith and Nephew, the company will finance this deal using funds from its cash balances and debt facilities.

According to Smith and Nephew CEO Olivier Bohuon, the deal came as a ‘compelling opportunity’ to enhance its portfolio with the products and technologies of ArthroCare. The latter’s expertise; particularly in the treatment of shoulder joints will help Smith and Nephew accentuate its sports medicine business line further.

Of special importance is ArthroCare’s radio-frequency technology that proves beneficial in non-invasive surgery. This particular technology will be combined with the existing mechanical blade portfolio of Smith & Nephew in a bid to offer more choice to surgeons. 
With the completion of the new deal, Smith & Nephew expects new sales opportunities and cost reductions that will help give a USD 85 million boost to its annual profits.

According to industry analysts, ArthroCare, with 2012 net sales of USD 368 million emerged as a potential target for takeover after its agreement with United States’ justice department pertaining to an investigation into alleged securities fraud that took place under its earlier management team.