Johnson & Johnson mulls fresh assault on Smith & Nephew: report

17 Jan 2011

US health care major Johnson & Johnson (J&J) is mulling launchin g a fresh takeover of UK-based hi-tech artificial knee and hip maker Smith & Nephew, The Sunday Times yesterday reported without citing sources.

The newspaper said J&J is considering making a formal offer of at least 800 pence-a-share for Smith & Nephew valuing the London-based FTSE 100 company at more than £7 billion ($11 billion).

The renewed interest by New Jersey-based J&J comes after The Telegraph reported late last week that the board of 155-year-old Smith & Nephew had last month rejected the US healthcare giant's informal takeover offer of 750 pence-a-share, or £7 billion on the grounds that the bid undervalued the company.

Reacting to The Telegraph report, Smith & Nephew said, it ''is not engaged in any discussions which could lead to a merger or a takeover involving the company.''

However, the board of Smith & Nephew is understood to have told its advisers to prepare a defence against a potential fresh assault on the company.

The possibility of taking over of another iconic UK company by a US major will be keenly watched by the British lawmakers and public alike after the controversial acquisition last year of Cadbury by Illinois-based Kraft Foods and the ongoing takeover saga of the 189-year-old Basingstoke, UK-based bank note printer De La Rue by French rival Oberthur Technologies.

It is believed that if J&J launches a fresh takeover of Smith & Nephew, other rivals like Indiana-based Biomet and Zimmer and Michigan-based Stryker may enter the fray.

Private equity-backed Biomet is already rumoured to be mulling a potential £15-billion merger with Smith & Nephew, although it is not yet thought to have made a formal approach.

Smith & Nephew is the world's largest maker of arthroscopy products, second-largest maker of advanced wound management products, third-largest producer of trauma and clinical therapy products and fourth-largest producer of orthopedic reconstruction products.

It has operations in 32 countries and its over 1,000 product ranges are sold in over 90 countries.

The company that started off as a dispensing chemist in 1856, posted net income of $472 million last year on revenues of $3.8 billion.