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LONDON (Alliance News) - Smith & Nephew PLC said Monday it will acquire medical devices company ArthroCare Corp for USD1.7 billion
Smith & Nephew will pay USD48.25 per share for the Texas-based firm, which it said is a 20% premium over ArthroCare's 90-day volume-weighted average share price. ArthroCare shares closed Friday on NASDAQ at USD45.38 per share.
The medical technology company said that ArthroCare's products would compliment and strengthen its sports medicine business.
Smith & Nephew expects cost and revenue synergies from the acquisition of around USD85 million to its annual trading profit in the third full year.
The acquisition will be financed from its debt facilities and cash balances, including Smith & Nephew's existing USD1 billion revolving credit facility and a new two-year USD1.4 billion term loan facility with Barclays PLC and J.P Morgan Chase & Co. The company expects to complete the acquisition in mid 2014.
Smith & Nephew said it has suspended its share buy-back programme due to the acquisition. It has completed USD226 million of the USD300 million share buy-back programme.
"ArthroCare and Smith & Nephew know each other well from our licensing and supply agreements, and this is a natural transaction for both companies," said ArthroCare Chief Executive Officer of ArthroCare David Fitzgerald in a statement.
Shares in Smith & Nephew were trading up 1.1% at 885.50 pence shortly after market open Monday.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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