Smith & Nephew Regulatory News (SN.)

Smith & Nephew completes acquisition of ArthroCare

29 May 2014

Smith & Nephew plc (LSE: SN, NYSE: SNN), the global medical technology business, today announces the completion of the acquisition of ArthroCare Corporation, an innovative medical device company with a highly complementary sports medicine portfolio. The purchase price was $48.25 per share paid in cash, translating into an enterprise value of approximately $1.5 billion.

Commenting, Olivier Bohuon, Chief Executive Officer of Smith & Nephew, said:

"The acquisition of ArthroCare is a compelling transaction that accelerates our strategy to rebalance Smith & Nephew towards our higher growth segments. Its technology and highly complementary products will significantly strengthen our portfolio, and we will use our global footprint to drive substantial new revenue growth. We are pleased to welcome ArthroCare's employees to Smith & Nephew and look forward to the further development and expansion of our combined business."

The acquisition has clear strategic rationale:

· Creation of a comprehensive resection and repair portfolio with exciting growth prospects.

- In resection, the combination of ArthroCare's latest generation of radio frequency (RF) technology and Smith & Nephew's strong mechanical blade portfolio gives customers greater choice.

- In joint repair, ArthroCare's shoulder anchor innovation strongly complements our strength in knee repair, forming an extensive, integrated portfolio.

· Additional revenue opportunities from combined global footprint and channel presence.

- Cross-sell the combined portfolio and build upon shared capabilities in marketing and customer targeting.

- Utilise Smith & Nephew's more extensive and established global footprint to introduce ArthroCare's products to new customers and markets.

· Adjacent Ear, Nose & Throat (ENT) business provides new growth opportunities.

- Ability to expand this business into new global markets.

- Prospects to utilise Smith & Nephew's technologies to develop product range further.

· An enhanced pipeline.

- Strong combined new product pipeline and R&D expertise will accelerate delivery of future innovation.

The acquisition is expected to deliver substantial cost and revenue synergies that add approximately $85 million to annual trading profit in the third full year.

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About Smith & Nephew

Smith & Nephew is a global medical technology business dedicated to helping healthcare professionals improve people's lives. With leadership positions in Orthopaedic Reconstruction, Advanced Wound Management, Sports Medicine and Trauma & Extremities, Smith & Nephew has around 11,000 employees and a presence in more than 90 countries. Annual sales in 2013 were more than $4.3 billion. Smith & Nephew is a member of the FTSE100 (LSE: SN, NYSE: SNN).

For more information about Smith & Nephew, please visit our corporate website www.smith-nephew.com, follow @SmithNephewplc on Twitteror visit SmithNephewplc on Facebook.com

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