Stryker weighs $15 bn bid for British medical device maker Smith & Nephew

US surgical implant maker Stryker Corp is planning to table a buyout offer for British medical device maker Smith & Nephew Plc and could offer a substantial premium, Bloomberg reported on Monday, citing people familiar with the matter.

Stryker could offer around 30 per cent premium to Smith & Nephew's current share price, valuing the company at about £9.7 billion ($15 billion), the report said.

Stryker is not planning a tax inversion because of the limited tax benefits and political risk, the report added.

A spate of recent overseas acquisitions made by US companies in order to move their tax base to countries with lower tax rates had forced the US Treasury in September to unveil harsh changes on corporate inversions and scuppered several high profile deals, including Illinois-based AbbVie's proposed $55-billion takeover of Irish drug maker Shire Plc.

But Stryker is not looking at saving taxes since its tax rate is around 23 per cent, while Smith & Nephew's tax rate is 29 per cent, but a deal would help Stryker spend its profits generated overseas instead of repatriating them to the US where it is liable to pay a 35-per cent corporation tax.

The latest reported move from Michigan-based Stryker comes seven months after Stryker said that it does not intend to make an offer for Smith & Nephew for six months after the Financial Times reported in May that it has hired banks and is working on obtaining funding for a possible bid for the UK-listed medical device maker. (See: Stryker denies Smith & Nephew bid)

The standstill period under the UK takeover rules expired late last month and Stryker is now free to table a bid.

Smith & Nephew, which started off as a dispensing chemist in 1856, 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 orthopaedic reconstruction products.

The company has operations in 32 countries and sells over 1,000 products in over 90 countries.

The London-based company has a presence in more than 90 countries and generated sales of $4.3 billion in 2013.

In recent times Smith & Nephew has been frequently reported by analysts as a takeover target.

In 2010 Johnson & Johnson was reported to be considering making a fresh takeover bid for the FTSE 100 company after the board of Smith & Nephew had earlier rejected the US healthcare giant's informal takeover offer of 750 pence-a-share, or £7 billion.

In June this year, Bloomberg had reported that US medical device maker Medtronic Inc was weighing a deal to acquire Smith & Nephew in order to lower its taxes by moving its base to the UK.

Founded by Dr Homer Stryker as the Orthopedic Frame company in 1946, Stryker is one of the world's leading medical technology companies offering a diverse array of medical devices, including reconstructive implants, medical and surgical equipment, and neurotechnology and spine products.

Stryker competes with DePuy Orthopaedics, Zimmer Holdings, Medtronic, Synthes, Smith & Nephew, and Biomet, and holds a 16-per cent share in the global orthopaedic market.

The company sells its products through local dealers, and directly to doctors, hospitals, and other healthcare facilities, as well as through third-party dealers and distributors primarily in the US, Ireland, Germany, France, Switzerland, the UK, Japan, Canada, the Pacific region, and Latin America.

Stryker, which has a market cap of $36.5 billion, posted net profit of $1 billion in 2013 on revenues of $9 billion.