Smith & Nephew shares jump on Stryker bid rumours

28th May 2014 14:23

Smith & Nephew shares surged on Wednesday afternoon on the back of reports that US medical device manufacturer Stryker is readying a takeover offer for its UK rival.According to the Financial Times which cited people close to the matter, Stryker has hired banks and is working on the funding for a possible bid for the wound management, endoscopy and orthopaedics group.While the process is said to be at an early stage and the exact value of a proposal is yet unknown, it is likely to be above Smith & Nephew's 953p closing price on Tuesday, which values the company at around £8.5bn.The FT said that the deal could reduce Styker's tax bill using a process called 'inversion', in which US companies relocate their headquarters in an attempt to avoid American tax obligations. The paper said that Stryker would need to put up fund a big portion of any potential deal with stock to qualify for an inversion.Smith & Nephew's shares were trading 2,5% higher at 977p by 14:42 on Wednesday, having initially surged to an intraday high of 1,120p after the news first broke. Stryker, meanwhile, was up 3.4% at $83.09 in US trading.BC