Smith & Nephew Completes $1.5 Billion Acquisition of ArthroCare
By Jof Enriquez,
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Smith & Nephew recently completed its acquisition ArthroCare Corporation for an estimated $1.5 billion. The deal, first announced in February, will allow S&N to round out its resection and repair portfolio; cross-sell the combined portfolio; push its ear, nose, and throat business into global markets; and combine research and development expertise for an accelerated pipeline of products.
S&N said that the pairing of its mechanical blade products for resection with ArthroCare's new generation of radio frequency (RF) technology will give customers a broader range of treatment options. ArthoCare's shoulder anchor innovation will complement S&N's hip implants and knee reconstruction solutions.
"The acquisition of ArthroCare is a compelling transaction that accelerates our strategy to rebalance Smith & Nephew towards our higher growth segments," Olivier Bohuon, CEO of Smith & Nephew, said in a press release. "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."
In a letter to ArthroCare clients, Michael Frazzette, S&N's president of advanced surgical devices, wrote, "We look forward to providing you with an even more comprehensive and innovative sports medicine portfolio comprised of tissue repair, handheld instruments, RF, coblation and resection technologies, along with a single point of access to clinically proven solutions."
The S&N press release did not indicate any immediate staff changes, but Arthrocare president and CEO David Fitzgerald recently said in a report by the Austin Business Journal that S&N will be making announcements regarding management and other changes to ArthroCare in the coming weeks.
According to an article in The Wall Street Journal, the completed deal means "more than half of S&N's sales now are in sports medicine and wound care, not orthopedics." The Journal said that this makes it unlikely that U.S. rival Stryker would buy the smaller S&N, a speculation recently denied by Stryker, because "S&N doesn't look as neat a fit as it did a few years ago" and because such a deal may face scrutiny from regulators.
Consolidation in the orthopedics segment continues, following the recent purchase of Biomet by Zimmer, forming the second-largest company in this space. The acquisition cost Zimmer $10.35 billion in cash and $3.0 billion in common stock.