Tara Lachapelle is a Bloomberg Gadfly columnist covering deals. She previously wrote an M&A column for Bloomberg News.

Markets are tanking so far this year, and the mega-merger spree seems to be winding down. Nevertheless, event-driven traders remain an optimistic bunch, anticipating takeovers of companies like Smith & Nephew, which has been "in play" for decades. They say this is finally the year that the $14 billion knee-implant maker will be acquired.

Yes, they also said 2015 was going to be the year, and 2014, and so on. But this time it really, really is, and they're going to prove all you naysayers wrong.

Each January, Bloomberg surveys traders and analysts about top European takeover candidates. Yet again, Smith & Nephew's name was dropped most often. In their defense, there is a clear rationale for a Smith & Nephew takeover, especially by its rival Stryker. Given an aging population, the need for hip and knee replacements should only rise. And consolidation in the medical-device industry has already scooped up some of its closest peers.

Still Expanding
While Stryker's revenue growth is projected to outpace Smith & Nephews for the next two years, after that the tables may turn. The hunt for growth has been driving mergers and acquisitions worldwide.
Source: Bloomberg

But don't break out the champagne just yet. We've been invited to this party before and nobody showed. I've found stories going all the way back to at least 1997 in which rumors swirled about an acquisition of Smith & Nephew. Twenty years ago, it was the company's treatment for diabetic foot ulcers that made it such a hot target. If you're reading this on a Bloomberg terminal, click here to scroll through all of the rumors over the years. 

Latest Medical Device Deals
Medtronic, which focuses on cardio devices, used the Covidien deal to move its tax address to Ireland from the U.S. Stryker may want to do the same should it pursue a transaction with Smith & Nephew.
Source: Bloomberg

If a deal were to happen, Stryker and Johnson & Johnson are still the likely suspects as far as bidders go. But while J&J is the No. 1 maker of orthopedic devices, it's also a sprawling company, with pharmaceuticals and consumer products in addition to medical devices. So its M&A ambitions could lie elsewhere. Pharma companies looking for new drugs have been at the center of the world's mega-merger activity.

That leaves Stryker as the most logical suitor at this point, and it definitely has more of a reason to bid now than ever. Seven months ago, Zimmer Holdings completed a $13.4 billion acquisition of Biomet, and the combined company bumped out Stryker as No. 2 in the orthopedic-device market. 

Dull Year
Shares of Smith & Nephew and oft-speculated suitor Stryker posted a sleepy performance this past year. Is it time for a merger to awaken them?
Source: Bloomberg

Stryker was said to be planning a merger proposal for Smith & Nephew in December 2014, but nothing ever came of it. Waiting may have been smart because A) Smith & Nephew's shares are little changed since then, and B) takeover valuations were more elevated last year due to all the deal hype. Now that things have died down a bit and the market is off to a bumpy start, those hopeful traders could be onto something this time.

Or will we be saying the same thing in 2017?

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tara Lachapelle in New York at

To contact the editor responsible for this story:
Beth Williams at