Medtronic Discusses Takeover Bid For Smith & Nephew

Medical device maker Medtronic MDT is discussing a takeover bid for Smith & Nephew SNN, according to Bloomberg.

Tax Inversion/ Product Expansion Deal

Bloomberg's sources noted the takeover bid would be structured as a tax inversion deal, where Medtronic would use Smith & Nephew's corporate office to reap the tax benefits.

The report added that Medtronic is looking to expand offerings in the heart, muscle and skeleton and diabetes products. Smith & Nephew currently sells knee and hip implants, in addition to other implants to repair “traumatic injuries.”

A “Serious” Bidder”

Analysts and investors are viewing Medtronic as a more “serious” bidder than Stryker SYK.

Last week, the Financial Times reported that Stryker's CEO Kevin Lobo said the company was preparing a bid for Smith & Nephew. Following the report, Stryker commented that “it does not intend to make an offer for Smith & Nephew at this time, but reserved the right to make a future bid.”

Stock Action

Shares of Medtronic spiked more than five percent after 2:00 p.m. ET following news of the takeover bid. Smith & Nephew stock gained more than 16 percent, hitting $100.86, on the news.