Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
Summary: British medical devices maker Smith & Nephew is in early talks to purchase American rival Biomet for between $10.5 billion and $12 billion. Biomet is a leader in orthopedic devices, and the combined company would join the ranks of market leaders Stryker Corp., Johnson & Johnson and Zimmer Holdings Inc. S&N CEO Chris O'Donnell warned that though there is logic to the acquisition, a deal could be complicated by the difficulty of integrating two sales forces. Still, Biomet's share price has risen as much as 18% over the past month on speculation that it will be acquired. Biomet has retained Morgan Stanley to assist it in locating "strategic alternatives," but has not confirmed that it is interested in a transaction. O'Donnell said S&N's sales of orthopedic reconstruction devices rose 13% percent in Q3, well beyond the market's 7% growth. Together, S&N and Biomet would have 14% of the global orthopedics market, on a par with Zimmer and slightly behind Stryker and Johnson & Johnson. Meanwhile, S&N reported a 50% Q3 earnings net profit rise $93 million from $62 million a year earlier on a stronger U.S. market and the rollout of new products. Sales increased 11% to $679 million from $612 million.
Related links: Biomet: Good Product Innovation, But Weak Financial Performance • These Medical Device Companies' Time May Have Come...Again • Smith & Nephew Holds Tie-Up Talks With Biomet [Wall Street Journal]
Potentially impacted stocks and ETFs: Biomet Inc. (Pending:BMET), Smith & Nephew plc (NYSE:SNN), Stryker Corp. (NYSE:SYK), Johnson & Johnson (NYSE:JNJ), Zimmer (ZMH) • iShares Dow Jones US Medical Devices (NYSEARCA:IHI)
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