Nov 4 (Reuters) – Smith+Nephew cut its full-year revenue and profit forecast on Wednesday as the British medical device maker also confirmed that talks about a potential merger with Johnson & Johnson’s orthopaedics unit have ended.
The forecast cut follows weaker-than-expected third-quarter growth in Smith+Nephew’s biggest orthopaedics business, which has been plagued by years of weak performance, prompting it to seek options for the business, including with J&J.
Smith+Nephew had approached the US healthcare group earlier this year with an offer valuing the latter’s hip and knee replacement unit at as much as $22 billion, almost double its own £9.4 billion market value, a person familiar with the matter told Reuters in October.
The discussions, however, collapsed after the parties could not come to an agreement over who would run the enlarged group, the person said. Smith+Nephew did not provide any details on Wednesday of why the talks ended.
Shares of the FTSE 100 firm were down 1.7% in early trade.
Smith+Nephew said it will continue to explore strategic options for its orthopaedics arm, which accounts for about 40% of its annual sales, and forecast a continued slowdown in the business through the final quarter.
“The confirmation that it is exploring strategic options (even if slightly indefinite wording) is likely to be welcomed by bulls, although bears might question the timeline and who might actually be interested in buying ortho (against the backdrop of a weaker market),” J.P. Morgan analysts said in a note.
(Reporting by Yamini Kalia in Bengaluru; Editing by Harikrishnan Nair, Rashmi Aich, Philippa Fletcher)
