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Smith & Nephew CEO to Retire Amid Bid Speculation; Bohuon Named

Smith & Nephew Outgoing CEO Dave Illingworth
Dave Illingworth, outgoing chief executive officer of Smith & Nephew Plc, said, “I came to a very personal and difficult decision to retire and return to the U.S.” Source: Smith & Nephew via Bloomberg

Feb. 10 (Bloomberg) -- Smith & Nephew Plc, Europe’s largest maker of shoulder and knee implants, named Olivier Bohuon as chief executive officer to replace David Illingworth, who has decided to retire after four years in the job.

Illingworth, 57, will step down at the end of the annual general meeting on April 14, the London-based company said in a statement today. He will stay on as an employee through August to help Bohuon, 52, chief executive of French drugmaker Pierre Fabre SA, with the transition.

Smith & Nephew is switching CEOs at a time when investors have been speculating the company has attracted takeover interest. The stock has risen 20 percent since Dec. 1 after news reports that Johnson & Johnson, the world’s largest health-care company, and Biomet Inc. had made approaches to Smith & Nephew.

“It’s quite surprising,” Lisa Bedell Clive, analyst with Sanford C. Bernstein Ltd. in London, said in a telephone interview. “He’s very well liked and he’s been at the helm for a relatively limited amount of time.” The firm has a “market perform” rating on Smith & Nephew’s stock.

Smith & Nephew declined to comment today on speculation the company may be sold. The company said Jan. 14 it wasn’t engaged in any talks that could lead to a takeover.

‘Difficult Decision’

“I came to a very personal and difficult decision to retire and return to the U.S.,” Illingworth said during a conference call with reporters today. He and the board have been working on a succession plan for some time, he said. The CEO selection process took place “over a period of months,” Chairman John Buchanan told investors on a conference call. Illingworth said he doesn’t have another job lined up.

Fourth-quarter trading profit rose to $278 million from $254 million a year earlier, Smith & Nephew said today. Earnings per share climbed to 20.5 cents, up from 14.5 cents a year earlier, beating the 19.3 cents a share mean estimate of nine analysts surveyed by Bloomberg.

Smith & Nephew rose 15 pence, or 2.1 percent, to 727 pence in London trading, giving the company a market value of 6.47 billion pounds ($10.4 billion).

Bohuon joined Pierre Fabre, a closely held company in Castres, France, on Sept. 1. He previously ran the pharmaceutical business of Abbott Laboratories.

The appointment may damp some of the speculation about a sale, said Chris Donnellan, an analyst at Evolution Securities Ltd. in London. He rates the stock “add.”

“The strong results will be overshadowed by the departure of David Illingworth,” Donnellan wrote in a note to clients today. The earnings “show the impact of the work of the CEO and his team of the last four years in a positive light.”

Sales were the same level as a year ago at $1.07 billion, compared with the $1.04 billion average estimate of 16 analysts surveyed by Bloomberg. Operating profit grew to $267 million from $189 million, compared with the $237.5 million average estimate of six analysts surveyed by Bloomberg.

Revenue from orthopedics, which represents about half of the company’s sales, declined 1 percent to $584 million. The advanced wound management unit’s sales increased 4 percent to $251 million.

To contact the reporter on this story: Allison Connolly in Frankfurt at aconnolly4@bloomberg.net.

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net.

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