M&A news update: Smith & Nephew and Bouygues

<p>Recurring takeover speculation surrounding UK-based medical devices manufacturer, Smith & Nephew, has resurfaced. That’s certainly helped give the company shares, which are down today, a […]</p>

Recurring takeover speculation surrounding UK-based medical devices manufacturer, Smith & Nephew, has resurfaced.

That’s certainly helped give the company shares, which are down today, a bit of a lift recently – up around 12% over the last week on the back of that talk.

Reports emerged last week suggesting that US-based, Stryker, was considering a takeover bid for the UK-based company. Stryker is said to have confirmed that it was evaluating a bid, but, isn’t planning to make an offer.

That hasn’t stopped more M&A talk from ensuing: more recently, there’s been chatter that US-based, Medtronic, might have an eye on Smith & Nephew.

That’s aside from Johnson & Johnson, which is said to have made an unsuccessful move on Smith & Nephew a few years ago, and has recently been mentioned as standing to benefit from making a fresh move.

Is there anything for an acquirer to like about Smith & Nephew?

Well, Smith & Nephew does have its attractions.

For starters, the company’s product portfolio includes orthopaedic reconstruction implants for hip, knee and shoulder joints.

That market is expected to enjoy strong growth globally over the next few years, driven – in part – by an aging population. Recent estimates peg the size of that market to grow to around $41bn by 2019, up from $29bn in 2012.

Meanwhile, potential tax benefits have been cited as a possible motivating factor for any US-based acquirer.

All of that’s aside from the fact that Smith & Nephew has a comparatively small market capitalisation and a virtually debt-free balance sheet, which makes it an eminently affordable target for its aforementioned larger rivals.

Certainly, the company’s appeal is there to be seen, and while the current chatter may well be just that, there seems to be some logic to it – and that should help prop up Smith & Nephew’s shares.

Regarding Bouygues…

There’s reportedly been some momentum regarding a potential purchase of the company’s telecoms business (Bouygues Telecom).

Recent reports have suggested that Orange has lined up some banks to evaluate a potential acquisition of Bouygues Telecom.

That follows last month’s news flow that suggested Orange held informal talks with Bouygues regarding acquiring the business.

Certainly, such a tie-up faces potential regulatory hurdles, meanwhile, there’s a possibility that Bouygues Telecom could be acquired by another telecoms operator (low-cost player, Iliad, has been mooted).

Nonetheless, for Bouygues, offloading its telecoms business bodes well – it’s been highlighted here previously and so has the fact that the other French telecoms operators stand to benefit from further consolidation in the sector.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.