Smith & Nephew today spent $782 million (£488 million) buying its way into the fast-growing wound-care market, acquiring a business whose products include an ointment that removes dead tissue from injuries.
The FTSE 100-listed replacement hip and knee maker bought US firm Healthpoint, the maker of Santyl wound-cleaning ointment, which also has a treatment for leg ulcers in late-stage trials.
Demand for artificial hips and knees has been hit by the recession — potential recipients don’t want to risk upsetting their employers by taking lengthy sick leave — while governments have been trimming health budgets. So S&N chief executive Olivier Bohuon, who joined last April, has been looking at ways to diversify. Before today’s deal, the company had about a quarter of its revenues from wound care. Bioactive treatments like those made by Healthpoint trigger new ways of skin generation and focus on treating hard-to-heal wounds such as foot ulcers in diabetic patients.
Bohuon said its wound-care buy was “an important step for Smith & Nephew.” He added: “It brings material revenues from a fast growing product range, an attractive pipeline, and commercial and R&D capabilities upon which we will build.”
But City analysts thought the deal could be expensive. “At over four times sales, we believe Smith & Nephew has paid a full price for this acquisition,” said Brian White at Shore Capital.
Healthpoint, which is based in Texas and currently only sells to the US market, is expected to have revenues of $190 million this year. Deutsche Bank advised S&N on the transaction while Bank of America Merrill Lynch and JP Morgan advised Healthpoint.
S&N shares slipped 5.5p to 653.5p.
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