Smith & Nephew (FTSE:SN, NYSE:SNN) cleared 1 hurdle to its $1.7 billion acquisition of ArthroCare (NSDQ:ARTC) by agreeing to pay $12 million to settle a stockholder lawsuit seeking to block the deal.
ArthroCare, Smith & Nephew and the deal’s backers "vigorously denied" any wrongdoing alleged in the lawsuit, which was consolidated from 8 complaints lodged shortly after the deal was announced in February, according to a regulatory filing.
A hearing on a bid to enjoin the merger was slated for April 28-29, according to the filing. The settlement puts all claims to bed in the case, clearing the way for Smith & Nephew’s bid to vastly expand its sports medicine business.
The British medical products giant said Feb. 3 that it had offered $48.25 per share to buy ArthroCare, sending ARTC shares up as investors speculated that rivals could emerge to try to top Smith & Nephew’s bid.
An acquisition became more feasible for ArthroCare early this year, when it agreed to pay $30 million to settle a $400 million fraud case with the U.S. Justice Dept. The Jan. 7 deal put to rest a years-long probe into an alleged scheme designed to generate false revenue numbers to meet internal and external forecasts by dumping inventory, first with a distributor called DiscoCare and eventually via free shipments to end-users.