Analyst: Stryker Deal Not Dead For Smith & Nephew

Smith & Nephew PLC's

chief executive says he's not interested, but Stryker Corp.

still might prevail with a bid, an analyst said Tuesday. Needham's Michael Matson said such a deal is "highly probable" and would boost Stryker's earnings 12 percent within a year even apart from tax inversion benefits. Matson upgraded Stryker to Buy from Hold, setting a $93 target in a note Tuesday. Stryker Chief Executive Ken Lobos said in May that the company was considering a bid for Smith & Nephew, but then backed off and said no offer was coming. British securities law bars Lobos from making an unsolicited offer for six months following the statement, unless a rival bidder materializes. But Smith & Newphew's Chief Executive Olivier Bohuon said he's not interested. “A good deal must always have a strategy component. If it's just for money, I'm not sure this is great,” Bohuon told the U.K's Telegraph in June. Any U.S. company that acquired U.K.-based Stryker would have the opportunity for a so-called tax inversion, avoiding relatively high U.S. corporate taxes by moving its headquarters offshore. Acquiring Smith & Nephew would instantly make Stryker number two in reconstructive sales, number one in sports medicine, significantly boost its number two position in trauma, according to Matson, who figured Smith & Nephew holders would get a 20 percent premium. Smith gained 1.6 percent recently to $86.03 a share; Stryker traded recently at $79.58, nearly unchanged.