Smith & Nephew to buy AnthroCare
U.K.-based medical technology company Smith & Nephew announced its plan to buy American medical device maker AnthroCare in a $1.5 billion deal. The British firm says that the purchase will strengthen its sports medicine business.
Based in Austin, Texas, AnthroCare makes surgical devices, instruments and implants that are focused on shoulder joint repair. In a phone call with reporters, Smith & Nephew CEO Olivier Bouhon said that that the Texas firm's expertise in shoulder devices would greatly complement his company's strength in knee repair.
"This is a great deal that rebalances Smith & Nephew in areas of higher growth," Bouhon said to the reporters.
With the consolidation of materials and resources, Bouhon said that the merger will boost Smith & Nephew's annual profit by $85 million in the third year after the completion of the deal.
Smith & Nephew will pay $48.25 in cash for each share of AnthroCare. The Texas company is currently under investigation by the U.S. Justice Department (DOJ) for alleged securities fraud by former management. The company already paid a $30 million fine to the government, but is still dealing with additional issues. The DOJ also charged the firm with one count of conspiracy to commit securities fraud and wire fraud, but it has entered into a two-year deferred prosecution agreement. If AnthroCare meets the DOJ's requirements, the charges could be dropped.
Wise companies understand that business acquisitions can elevate their brand, expand their reach and increase their revenue, making these agreements considerably more popular, as demonstrated by the growing number of mergers in the medical device field.