Smith & Nephew Plc (SN/) agreed to pay $12 million to settle lawsuits filed by ArthroCare Corp. shareholders seeking more money in a proposed $1.7 billion takeover by the medical-device maker.
Smith & Nephew, based in London, said Feb. 3 it would pay $48.25 a share in cash for ArthroCare to add products for minimally invasive surgery used in sports medicine. ArthroCare investors alleged in lawsuits filed in Delaware Chancery Court in Wilmington that the offer was too low.
The price was 6.3 percent more than the Austin, Texas-based company’s closing level Jan. 31 in Nasdaq trading. ArthroCare rose above the takeover price, indicating some investors might be speculating on a higher offer.
Smith & Nephew settled to avoid the “inconvenience, expense, risk, and distraction of further litigation,” according to court papers filed today. Company officials denied all allegations of wrongdoing or liability.
The accord needs court approval and legal fees won’t come from the settlement fund, Smith & Nephew said.
ArthroCare rose 0.7 percent to $48.50 at 2:58 p.m. New York time.
ArthroCare makes products used in arthroscopic surgery on shoulders and knees. Cost reductions and additional sales will boost annual profit by about $85 million in the third full year after the purchase is complete, Smith & Nephew said in February. It makes sports-medicine surgical equipment as well as artificial hips and knees.
The case is In re ArthroCare Corp. (ARTC) Stockholder Litigation, CA9313-VCL, Delaware Chancery Court (Wilmington),
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