Smith & Nephew buys ArthroCare for $1.7bn

Artificial hip and knee maker Smith & Nephew has paid $1.7 billion for medical device maker ArthroCare, just weeks after the US firm settled a long-running Department of Justice investigation into securities fraud at the company.

British firm Smith & Nephew said the purchase of the Austin, Texas-based company would strengthen its fast-growing sports medicine division.

Smith & Nephew’s chief executive Oliver Bohuon called the deal "compelling" and said : "Together, we will be able to generate significant additional revenue from the more comprehensive portfolio, combined sales force and Smith & Nephew’s global footprint."

ArthroCare develops and manufactures surgical devices, instruments, and implants, focusing on sports medicine and ear, nose, and throat.

Chief executive David Fitzgerald called the takeover a "natural transaction for both companies".

Last month ArthroCare agreed to pay the US Department of Justice $30 million to settle an investigation into an alleged $400 million securities fraud scheme under the previous management team.

Last year two executive’s pleaded guilty to conspiracy to commit securities and wire fraud, and ArthroCare’s former chief executive and chief financial officer are due to stand trial later this year as part of the probe, first announced in 2008.

Smith & Nephew’s shares rose 1.2 per cent on news of today’s deal.