The U.K.’s Competition and Markets Authority granted "unconditional clearance" for the merger May 21, clearing the way for the deal to close. Yesterday ArthroCare said it is now a wholly owned subsidiary of the British orthopedics giant.
The deal, announced Feb. 3, had Smith & Nephew pay $48.25 per share for ArthroCare. ARTC shares spiked on news of the pact as investors speculated that rivals could emerge to try to top the British medical device giant’s bid.
Smith & Nephew said at the time that it expects the ArthroCare acquisition to add roughly $85 million to its annual trading profit after integration, slated to be complete in about 3 years. The merger is projected to cost about $100 million over 3 years, the company said. Smith & Nephew plans to finance the deal by tapping a $1 billion credit revolver and a new, $1.4 billion term loan; the deal also means a halt for its $300 million share buyback program, with some $226 million spent so far.
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.