Smith & Nephew to Buy ArthroCare for $1.7 Billion in Cash

Smith & Nephew to Buy ArthroCare for $1.7 Billion in Cash (Bloomberg)

London-based Smith & Nephew Plc (NYSE: SNN) agreed to buy ArthroCare Corp. (Nasdaq: ARTC), of Austin, Texas, for $1.7 billion in cash to add products for minimally invasive surgery used in sports medicine. ArthroCare holders will receive $48.25 a share in cash, Smith & Nephew announced. The price is a modest premium of 6.3 percent above ArthroCare’s closing price level on Jan. 31. ArthroCare makes products used in arthroscopic surgery on shoulders and knees that will enhance Smith & Nephew’s business, the U.K. company’s management said. Cost reductions and additional sales will boost Smith & Nephew’s annual profit by about $85 million in the third full year after the purchase is complete, said the management of Smith & Nephew, makes sports-medicine surgical equipment, as well as artificial hips and knees. The deal shows American ingenuity is valued but Smith & Nephew did not need to pay a high premium to entice a seemingly willing seller.

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Paul Dykewicz is the editor of StockInvestor.com and the editorial director of Eagle Financial Publications in Washington, D.C. He writes and edits for the website, as well as edits investment newsletters, time-sensitive trading alerts and other reports published by Eagle. He also is an accomplished, award-winning journalist who has written for Dow Jones, USA Today and other publications, as well as served as business editor of a daily newspaper in Baltimore. In addition, Paul is the author of the inspirational book, "Holy Smokes! Golden Guidance from Notre Dame's Championship Chaplain." He received his MBA in finance from Johns Hopkins University, where he was a two-time president of the school's Finance Club. In addition, Paul has a bachelor's degree from the University of Michigan and a master's degree in journalism from Michigan State University. Outside of work, Paul volunteers with a faith-based organization to assist the poor in Southeast Washington, D.C., to learn personal finance skills to lift themselves out of debt.