El­liott in­ter­est drives 3pc leap in Smith & Nephew shares

The Daily Telegraph - Business - - Business - By Iain Withers

SHARES in FTSE 100 ar­ti­fi­cial hip and knee maker Smith & Nephew jumped 3pc yes­ter­day fol­low­ing re­ports that ac­tivist in­vestor El­liott Ad­vi­sors had built up a stake in the firm.

In­vestors re­acted pos­i­tively to the prospect of El­liott en­gi­neer­ing a shakeup at the firm, push­ing its stock up to £14.01 by close. On Mon­day the com­pany an­nounced Olivier Bo­huon, its chief ex­ec­u­tive, was to re­tire next year.

El­liott has a his­tory of us­ing its hold­ings in com­pa­nies to push for strate­gic or man­age­ment change and chalked up a ma­jor suc­cess ear­lier this year by suc­cess­fully pres­sur­ing for a break-up of min­ing gi­ant BHP Bil­li­ton.

Smith & Nephew’s mar­ket value has grown strongly since Mr Bo­huon took the helm in 2011, hit­ting an all-time high of £14.07 last month, and has out­per­formed the FTSE 100 and health­care ri­vals GSK and As­traZeneca over the pe­riod. But an­a­lysts say the firm could be de­liv­er­ing stronger re­turns.

In a note re­act­ing to the share price move­ment yes­ter­day, Morgan Stan­ley said “in­con­sis­tent ex­e­cu­tion on or­ganic sales growth as well as mar­gin ex­pan­sion” had led to it lag­ging its orthopaedic peer group.

Smith & Nephew and El­liott both de­clined to com­ment. The report first ap­peared on Bloomberg.

In half-year num­bers at the end of July, Smith & Nephew said it had been boosted by dou­ble-digit growth in emerg­ing mar­kets, help­ing buoy un­der­ly­ing sales by 3pc to $1.19bn (£901m) and trad­ing profits by 2pc to $493m. As well as or­thopaedics work, the firm spe­cialises in sports medicine and wound de­vices.

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