29th Oct 2015 10:10
LONDON (Alliance News) - Smith & Nephew PLC said Thursday it has agreed to acquire Blue Belt Holdings Inc for USD275 million, as it maintained its outlook for 2015, and reported a slight rise in revenue for the first nine months of 2015.
The medical equipment business said it has agreed to acquire Blue Belt, which works in orthopaedic robotics-assisted surgery, funded through its existing debt facilities. The deal is expected to close around the year end, and Smith & Nephew expects revenue growth from the business to be over 50% in the medium-term.
However, Smith & Nephew said that its trading profit margin will be diluted by around 60 basis points in 2016 as a result of investment it will make in combined research and development programmes and supportive clinical evidence. It expects Blue Belt to become profitable in 2018.
"Our experience working with Blue Belt Technologies and our customer insight has convinced us that robotics will become mainstream across orthopaedic reconstruction in the foreseeable future. This acquisition is a compelling strategic move, with the combination of complementary products and R&D programmes creating a platform from which we can shape this exciting new area of surgery," said Chief Executive Officer Olivier Bohuon in a statement.
Shares in the company were down 4.9% at 1,094.00 pence, one of biggest fallers on the FTSE 100.
Smith & Nephew for itself reported consolidated revenue of USD3.38 billion for the nine months to end-September, up from USD3.37 billion a year before.
In the quarter, Smith & Nephew reported revenue of USD1.11 billion, down from USD1.15 billion a year before.
The company said it had seen 4% revenue growth in the US during the quarter, driven by a strong performance in Knee implants, Sports Medicine Joint Repair and Advanced Wound Care. Its growth in other established markets was 1%, as it worked to stabilise its European business against a challenging market backdrop.
Revenue growth in Emerging Markets was 8%, as growth in most markets remained strong, however China slower in the quarter. This particularly hit Sports Medicine, where it saw a slowdown in capital and consumable sales, compounded by de-stocking in its distribution channel.
The company continued to warn that it expects a significant headwind from the strength of the dollar in 2015, and said that if current exchange rates prevail to the end of 2015, it would expect a full-year translation hit of around 8% on reported revenue.
Smith & Nephew maintained its guidance, continuing to expect high underlying revenue growth in 2015 compared to 2014 and an improvement in trading profit margin.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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