MASSDEVICE ON CALL — The Wall Street rumor mill may have largely given up on a merger between Stryker (NYSE:SYK) and Smith & Nephew (FTSE:SN, NYSE:SNN), but at least one analyst is still looking for a deal.
Needham & Co. analyst Michael Matson told investors this week that a deal is "highly probable," even though Stryker CEO Kevin Lobo has said the company is backing off and S&N CEO Olivier Bohuon has said his company isn’t interested in a merger, Benzinga reported.
Speculation began in earnest after the Financial Times fueled the acquisition fire earlier this year, spurring a Wall Street frenzy that sent SNN shares up more than 17%. The stock fell back to earth after Stryker denied the deal, but the company left the door open for a potential buyout.
After the hullabaloo subsided, Lobo confirmed Stryker’s interest during a television interview.
"We were actually in preliminary evaluations about considering a transaction," Lobo said in May. "It was early, but based on the price spike of Smith & Nephew we were called by the panel and we had to make this public statement."
The acquisition would be worth an estimated $19 billion, according to analysts at Morgan Stanley, and would confer an important benefit: The ability to return future overseas cash earnings back to the U.S., known as inversion.
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