NEW YORK (TheStreet) -- Shares of orthopedic device makers Stryker (SYK) and Smith & Nephew (SNN) are climbing after Financial Times reported this morning that Stryker was preparing a takeover bid for its U.K-based rival. However, Stryker said it does not
intend to make an offer for Smith & Nephew at this time, but reserved the right to make a future bid.
WHAT'S NEW: According to Financial Times, which cited unnamed sources, Stryker has hired banks as it explores a potential takeover bid for Smith & Nephew. Stryker is working on obtaining financing for the bid, the newspaper added. After the story was published, Stryker, at the request of the U.K. Takeover Panel, stated that it does not intend to submit a takeover bid for Smith & Nephew. However, Stryker said it reserves the right to announce or participate in an offer or possible offer for Smith & Nephew within 6 months after the date of its announcement today.
ANALYST REACTION: In a note to investors earlier today, research firm Summer Street wrote that it would make sense for Stryker to buy Smith & Nephew. Sryker
could pay about $100 per share for the British company, added the firm, which kept a Neutral rating on Stryker. In its own note, Wells Fargo analyst Larry Biegelsen said he "would not be surprised" to see Stryker eventually make a bid for Smith & Nephew. The firm noted that Stryker CEO Kevin Lobo confirmed in an interview that the company was in the early stages of evaluating an acquisition. Biegelsen believes a merger of the two companies would make strategic sense and maintained n Outperform rating on Stryker shares.
PRICE ACTION: Near noon, Stryker climbed 3.4% to $83.09, while Smith & Nephew shares trading in New York advanced 3.3% to $83.00.