Sir Christopher O'Donnell, the chief executive of Smith & Nephew, flies to Switzerland today to mount a charm offensive in favour of his company's offer for Centerpulse, the Swiss manufacturer of artificial hips, knees and teeth.
His arrival coincides with a crucial board meeting at Centerpulse that will decide its response to the £1.8bn bid from Zimmer of the US, which last month trumped S&N's earlier offer, now worth just £1.4bn in comparison. The board is likely to express its own neutrality between the two offers.
Sir Christopher believes that by cultivating the small Swiss shareholders based around Centerpulse's manufacturing base in Winterthur, he may be able to persuade them to accept a lower offer from S&N in preference to a Zimmer deal.
S&N is expected to raise its offer to close to £2bn, but may not make its move until next month. The Swiss takeover regulators have set a deadline of 18 August.
A spokeswoman for S&N said yesterday: "We don't want people to misinterpret our silence as our not being interested. We also believe that 'soft' issues will be important in determining the outcome of this bid battle. It won't just be about price."
Sir Christopher will tour Zurich and Winterthur to emphasise his message that S&N intends to move its corporate - though not its operational - headquarters to Switzerland if it wins control of Centerpulse. The chairman will be based in Zurich and board meetings will be held there, in a bid that will simultaneously keep S&N's tax bills low and appeal to national pride among the Swiss financial community.
Sir Christopher will also be meeting with union representatives in Winterthur to repeat assurances that the plant will remain open, initial job losses will be minimal and there would be potential to expand the current 1,200 employee base in the city in the medium term.
This is a commitment that Zimmer has also made, and sources in the US firm's camp said yesterday: "We have said Winterthur will be headquarters of our European operations, we went there as soon as we made our offer announcement, and we sent letters to employees. S&N has realised the importance of the place and is trying to catch up."
Zimmer is hoping that the Centerpulse board will tentatively recommend its £1.8bn bid after its meeting today. The Swiss takeover panel set a deadline this week for the board to respond, but it was unclear last night whether - in the face of the widespread expectation that S&N will re-bid next month - it will support either camp at this stage. Observers do not believe that the board will express a cultural preference in favour of S&N.
Centerpulse is already believed to be working on a £2bn-plus knock out bid for use in the event of S&N trumping its first offer. Centerpulse shares are currently trading above the value of the existing Zimmer offer in anticipation of one more round of bids.
- More about: