18th May 2016 12:50
LONDON (Alliance News) - Smith & Nephew PLC Wednesday said it has signed a deal to sell its gynaecology business to NASDAQ-listed Medtronic PLC for USD350 million, and said it will use the proceeds to return USD300 million to shareholders through a share buy-back programme.
The medical devices maker said that the gynaecology business delivered revenue of USD56 million in 2015, just over 1% of its total revenue.
The sale is expected to be broadly neutral to Smith & Nephew's adjusted earnings per share in 2017, after the share buy-back, and will reduce adjusted earnings per share by less than USD1.0 cent in 2016.
As the proceeds are "surplus to Smith & Nephew's current near-term capital requirements", they will be funnelled back to shareholders, with a share buy-back programme to begin shortly after the sale is complete in July.
"Smith & Nephew's management team has a strong track record of creating value through organic growth and by acquisition. The sale of our Gynaecology business demonstrates our disciplined strategic approach to capital deployment and to crystallising value through divestiture at the right time," said Chief Executive Officer Olivier Bohuon in a statement.
"The quality of the Gynaecology business was reflected by the strong interest from potential buyers, allowing us to obtain an attractive valuation. Our shareholders will benefit directly from the return of the proceeds through a share buy-back programme, in-line with our capital allocation framework," Bohuon added.
Shares in Smith & Nephew were down 1.1% at 1,138.28 pence Wednesday afternoon.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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