Smith & Nephew Pays 4X Revenue For Wound Care Business

In short

Smith & Nephew plc has announced that it has entered into an agreement through its subsidiaries to acquire substantially all the assets of Healthpoint Biotherapeutics, which it describes as a leader in bioactive debridement, dermal repair and regeneration wound care treatments, for $782 million in cash, which is reportedly over 4x revenue and 71x earnings. The company is clearly keen to invest heavily in strengthening its global position in advanced wound care.

Background

Analysts and media alike took a sharp intake of breath when it was announced that Smith & Nephew was to acquire Healthpoint, not because they were doing it, but because of the price.

S&N say the acquisition is supported by a compelling strategic and financial rationale, not least because it accelerates the company’s growth into bioactives, the fastest growing area of advanced wound management. Furthermore in its press release S&N gushes about complementary product ranges, additional R&D resource and other slightly softer benefits including the usual “synergy” word.

Most significantly though Expected to exceed Smith & Nephew says the deal will be earnings per share neutral in 2013 and accretive thereafter

Company comments

for Smith & Nephew

Olivier Bohuon, Chief Executive Officer of Smith & Nephew, said: “The acquisition of Healthpoint is an important step for Smith & Nephew. Strategically, it reinforces our Advanced Wound Management division by giving us a strong position in the fast growing area of bioactive wound care treatment. It brings material revenues from a fast growing product range, an attractive pipeline, and commercial and R&D capabilities upon which we will build. The combination benefits our customers, offering them a truly unique wound care business – having leadership positions across exudate and infection management, negative pressure and bioactives.”

for Healthpoint

Paul Dorman, Founder, Chairman and co-owner of Healthpoint commenting on the transaction said: “Healthpoint and Smith & Nephew have much in common – our commitment to innovation, the desire to serve healthcare professionals and a fundamental dedication to improving the quality of life for patients. We are very proud of our employees and the business we have built and believe now is the right time to allow it to grow to the next level by joining a global organisation like Smith & Nephew.”

The full Smith & Nephew release can be found here.

Source: Smith & Nephew plc