Newspaper article The Evening Standard (London, England)

Investors Discover a Silver Lining at Smith & Nephew; MARKET ROUND UP

Newspaper article The Evening Standard (London, England)

Investors Discover a Silver Lining at Smith & Nephew; MARKET ROUND UP

Article excerpt


SHARES of healthcare specialist Smith & Nephewedged 212p higher to 508p despite mounting speculation that it may turn to shareholders for more than [pounds sterling]1 billion if it chooses to go ahead with its proposed takeover of US rival Biomet.

Some stories suggest that if shareholders refuse to help fund the deal - even if the new shares are offered at a heavy discount the company may be forced to sell its wound care division. That would, it is argued, leave it free to concentrate on making artificial hips and joints, its main profit generator.

If S&N does press ahead with the acquisition of Biomet, it would catapult the enlarged group into the big league, competing with the likes of Johnson & Johnson, Striker and Zimmer Holdings.

Indiana-based Biomet is capitalised at around [pounds sterling]4.5 billion, while S&N boasts a price tag of almost [pounds sterling]5 billion. Word is Morgan Stanley has ruled out advising S&N on the deal because it already has close links to Biomet. Such a move would leave Deutsche Bank its sole adviser.

S&N's last attempt at hitting the acquisition trail was three years ago when it was outbid by Zimmer for Switzerland's Centerpulse.

Share prices started the week on a positive note despite the prospect of another rise in interest rates by the Bank of England's monetary policy committee on Thursday.

Bob Parker at Credit Suisse thinks a further rise in rates soon is almost inevitable and warns that the equity market is likely to end the year lower than present levels. The FTSE 100 index rose 23.9 to 6172.0.

Broker UBS has downgraded shares of French advertising outfit Publicis from buy to neutral following disappointing third-quarter numbers and is urging clients to switch into its UK rivals WPP Group, up 312p at 667p, or Aegis, 14p better at 13334p.

UBS had been forecasting revenue growth at Publicis of almost 5% and it came in at just 2.6%. The broker reckons uncertainty over the group's operational performance will continue, given that it has admitted two major clients have shelved spending plans, forcing forcing it to downgrade revenue growth forecasts by 1% to between 5% and 5. …

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