Elliott interest drives 3pc leap in Smith & Nephew shares
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.