S&N admits defeat in battle for Centerpulse

Smith & Nephew yesterday conceded defeat in its battle to take control of Centerpulse, the Swiss manufacturer of artificial hips, knees and screw-in teeth.

The FTSE 100 healthcare company decided it would be too costly to come back with an improved offer, after having been trumped by a £1.9bn bid from the US group Zimmer. S&N's board voted against plans for a £2.02bn offer.

Sir Christopher O'Donnell, S&N chief executive, said that the company would revert to its previous strategy of bolt-on and technology acquisitions.

He said: "The fundamental issue is value. There would be value transfer to the Centerpulse shareholders and the returns to S&N shareholders would be diminished or delayed."

S&N shares enjoyed a relief rally as it became clear the company would not be issuing new paper to fund an increased bid. The stock has been depressed as the company struggled to find ways of matching Zimmer's offer. Last night it closed up more than 6 per cent at 399.25p, its highest level since Zimmer gate-crashed the agreed merger deal in May.

There was also speculation yesterday that the collapse of the Centerpulse strategy left S&N vulnerable to a bid itself.

Analysts pointed to other mid-tier orthopaedics companies, including Biomet of the US, and to the medical devices company Medtronic as being likely to pass the slide rule over S&N. Sir Christopher insisted the group had an independent future. "This is not an industry driven by consolidation, it is a growth industry and the prizes go to those companies who can grow consistently and strongly. We introduce more technology than anybody else and I am very confident in our ability to keep growing the business with mid-teens earnings growth."

Zimmer's victory creates a £8bn global giant that will vie with Johnson & Johnson and Stryker for the number one position in orthopaedics. S&N is the number six player.

Centerpulse's chief executive, Max Link, held a board meeting of the Swiss company today, although it is still unclear whether he will formally recommend the Zimmer offer.

S&N said it had racked up fees "somewhere north of £20m" as a result of the abortive bid, even after accounting for the £9m "break fee" payable because the merger agreed in March will not now proceed.

The Swiss takeover board ruled on Tuesday that there would be no changes to the existing bid timetable. S&N had complained that the timetable favoured Zimmer since the US firm needed less time to get approval from its shareholders.

THE WIT OF O'DONNELL

"This deal transforms the scale of our orthopaedics business. We now become the world's third-biggest player. There is a lot of value to be unlocked from this deal."

20 March, 2003:

"Zimmer is trying to turn itself into an international company run out of Warsaw, Indiana. Most people would ask, where is Warsaw, Indiana? It is not even a significant city."

20 June, 2003:

"Was this a 'must do'? No. Was it a 'like to do'. Yes. Have we done it? No, so we'll go and do something else."

6 August, 2003:

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions