Bloomberg: Stryker Plans Takeover Bid For Smith & Nephew

(RTTNews) - Orthopedics devices maker Stryker Corp. (SYK) is planning a takeover bid for UK-based medical device maker Smith & Nephew plc (SNN, SN.L) in the coming weeks, Bloomberg reported Tuesday, citing people with knowledge of the matter.

According to the Bloomberg report, Kalamazoo, Michigan-based Stryker plans to offer a significant premium, likely to be about 30 percent, to Smith & Nephew's current share price. Stryker has a market capitalization of $36.55 billion, while Smith & Nephew has a market capitalization of $16.98 billion.

However, Stryker is reportedly not planning a tax inversion due to the limited tax benefits and political risk.

Several U.S. healthcare companies, are increasingly looking at tax inversions as an option to escape the high rate of corporate taxes in the U.S., which is among the highest in the world, as the U.S. overhauls its healthcare system under the Affordable Care Act. The statutory tax rate in the U.S. is currently 35 percent.

Some of these companies are sitting on huge cash hoards in their overseas subsidiaries and would be heavily taxed if they repatriated these funds to the U.S. However, U.S. lawmakers are now targeting legislation aimed at curbing U.S. companies from doing inversions.

The Financial Times had reported in late May that Stryker was preparing to make an offer to acquire Smith & Nephew. Stryker later denied that report, saying it does not intend to make an offer for the company.

In late June, Stryker agreed to acquire substantially all the assets of privately-held Small Bone Innovations, Inc., including an ankle replacement system, for up to $375 million in cash. Stryker noted that the acquisition of these assets will enable it to bolster its orthopedic portfolio.

SYK closed Tuesday's trading at $96.61, up $1.62 or 1.71 percent on a volume of 3.60 million shares.

SNN closed Tuesday's trading at $38.04, up $3.26 or 9.37 percent on a volume of 3.94 million shares. In after-hours, the stock declined $0.03 or 0.08 percent to $38.01.