Stryker Said to Mull Inversion Bid for Smith & NephewManuel Baigorri, Matthew Campbell and Dinesh Nair
Stryker Corp. is examining a bid for $16-billion medical-device manufacturer Smith & Nephew Plc as a standstill period that prevents it from making an offer nears its end, people with knowledge of the matter said.
The Kalamazoo, Michigan-based producer of surgical implants is discussing the financing of a deal and its potential antitrust hurdles with advisers, the people said, asking not to be identified because the discussions are private. Smith & Nephew, based in London, and its advisers are aware of Stryker’s interest, though the U.S. company could still decide against a bid, the people said.
Smith & Nephew shares jumped as much as 10 percent in London and were trading 5 percent higher at 1:55 p.m., valuing the company at 10.2 billion pounds ($16 billion).
Stryker is considering structuring the transaction as a so-called tax inversion, allowing it to move its legal address to the lower-tax U.K., three of the people said. Still, the U.S. firm sees strong strategic reasons to pursue a combination aside from tax advantages, and an inversion wouldn’t be essential to make the deal work, the people said.
In May of this year Stryker made a commitment under U.K. takeover rules to not pursue a takeover of Smith & Nephew for six months, after the Financial Times reported it was working on a bid. That standstill period expires this week, after which the U.S. firm is free to make offers.
The company was in the early stages of evaluating Smith & Nephew for an acquisition at that time, Stryker Chief Executive Officer Kevin Lobo told Fox Business Network in May.
Representatives for Stryker and Smith & Nephew declined to comment.
Medical-device companies are looking to consolidate as hospitals and insurers demand better prices from suppliers to tame rising costs. Two large manufacturers of surgical products and medical supplies, Medtronic Inc. and Covidien Plc, are in the process of completing a $42 billion deal to merge that was announced in June.