Smith & Nephew (NYSE:SNN) is in discussions to pick up spine-focused medtech developer NuVasive Inc. (NSDQ:NUVA) in a deal that could be worth more than $3 billion, according to a report from the Financial Times released late last week.
The companies have not officially commented on the possible acquisition.
NuVasive has a market valuation of approximately $2.6 billion, according to a Reuters report, with the alleged deal expecting to exceed the $3 billion threshold.
The acquisition could be a way for U.K.-based Smith & Nephew to improve its margins and find new growth to improve its position as compared to its larger rivals in the field, according to the Reuters report.
But exact terms of the deal “could not be learned” and the talks “may fall apart,” according to the Financial Times report, leaving the deal in a speculative state.
The timing of the deal is “surprising”, according to SVB Leerink market analyst Richard Newitter, as NuVasive just named former Medtronic (NYSE:MDT) surgical innovations prez J. Barry its new CEO last November, leaving the company without enough time to progress towards a ‘turnaround’.
“All of this may be very preliminary and/or amount to nothing more than speculation,” Newitter wrote in a letter to investors.
The acquisition rumor comes as NuVasive share prices neared their 52-week low, according to Newitter, who commented that “investors are braced for things to get worse at [Nuvasive] before they get better.”
Whether or not the acquisition is unlikely, Newitter said that NuVasive’s spinal portfolio could complement Smith & Nephew’s existing orthopedic offerings, but noted that potential synergies “would likely have to stem from a cross-selling thesis.”
The news has sent NuVasive shares up significantly, having risen approximately 12% so far in early morning trading, at $55.50 as of 9:48 a.m. EST.
Smith & Nephew shares have fallen today, down approximately 4.6% at $38.35 as of 9:52 a.m. EST.