Smith & Nephew dismisses merger speculation

MEDICAL technology group Smith & Nephew – maker of the Birmingham Hip Resurfacing System – has dismissed press speculation regarding a possible merger or takeover of the company.

Shares in the group had soared in recent days amid speculation it was in merger talks with firms in the United States.

Companies touted as possible suitors included Johnson & Johnson and Biomet, with merger deals rumoured to be around £15bn.

Reports said Smith & Nephew chief executive David Illingworth had been set to fly to New York to discuss terms with his counterpart at Biomet, Jeffrey Binder.

However, the firm dismissed the reports and said the two men were just engaged in general talks about the state of the medtech industry.

In a terse statement to the City, Smith & Nephew said it had a long-standing policy of not commenting on press speculation.

“However, exceptionally, Smith & Nephew wishes to clarify that it is not engaged in any discussions which could lead to a merger or a takeover involving the company,” it said.

Smith & Nephew is a global medtech business with interests in orthopaedics; including reconstruction, trauma and clinical therapies; endoscopy; including sports medicine; and advanced wound management.  

The speculation over the firm’s future had also reignited the debate about the hostile takeover of successful British companies by US corporations.

The debate was initiated following Kraft’s takeover of Cadbury last year and prompted calls for the Government to issue a Cadbury Law to protect British firms from such takeovers.

In the wake of the Cadbury deal, the Takeover Panel has issued guidelines calling for greater clarity by companies when identifying takeover targets. It said firms should enclose details about possible factory closures or job cut prior to any deal taking place.

The move has been designed to prevent a reoccurrence of the controversy surrounding the demise of the former Cadbury factory at Somerdale , near Bristol, which Kraft first indicated it would retain only to make an embarrassing U-turn shortly after completing its acquisition of the confectioner.

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