British medical equipment maker Smith & Nephew said on Monday that it has agreed to buy US peer ArthroCare Corp. for $1.7 billion (1.3 billion euros) to strengthen its sports medicine division.
Smith & Nephew said in a statement it will pay $48.25 in cash per ArthroCare share. That marked a premium of 6.3 percent to Friday's closing level.
“This is a compelling opportunity to add ArthroCare's technology and highly complementary products to further strengthen our sports medicine business," added S&N chief executive Olivier Bohuon.
"Together, we will be able to generate significant additional revenue from the more comprehensive portfolio, combined sales force and Smith & Nephew's global footprint.
"With this transaction, we are again accelerating our strategy to rebalance Smith & Nephew towards higher growth.”
The group added that it expected "substantial" cost and revenue savings to add $85 million to annual trading profit in the third full year.
However, S&N cautioned that one-off transaction expenses and integration costs would total approximately $100 million over the next three years.
“ArthroCare and S&N know each other well from our licensing and supply arrangements, and this is a natural transaction for both companies," added David Fitzgerald, President and CEO of ArthroCare.
"The board believes that this transaction is in the best interest of our shareholders.”
British medical equipment maker Smith & Nephew said on Monday that it has agreed to buy US peer ArthroCare Corp. for $1.7 billion (1.3 billion euros) to strengthen its sports medicine division.
Smith & Nephew said in a statement it will pay $48.25 in cash per ArthroCare share. That marked a premium of 6.3 percent to Friday’s closing level.
“This is a compelling opportunity to add ArthroCare’s technology and highly complementary products to further strengthen our sports medicine business,” added S&N chief executive Olivier Bohuon.
“Together, we will be able to generate significant additional revenue from the more comprehensive portfolio, combined sales force and Smith & Nephew’s global footprint.
“With this transaction, we are again accelerating our strategy to rebalance Smith & Nephew towards higher growth.”
The group added that it expected “substantial” cost and revenue savings to add $85 million to annual trading profit in the third full year.
However, S&N cautioned that one-off transaction expenses and integration costs would total approximately $100 million over the next three years.
“ArthroCare and S&N know each other well from our licensing and supply arrangements, and this is a natural transaction for both companies,” added David Fitzgerald, President and CEO of ArthroCare.
“The board believes that this transaction is in the best interest of our shareholders.”
