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Biomet circled by buyout firms: paper
2006-12-18
Private equity firms have been moving into prime position to buy orthopedics maker Biomet Inc. (Nasdaq:BMET), the Wall Street Journal reported on its Web site on Monday, citing people familiar with the matter. An auction for the company is in its final days, the paper said, and could come to a head before year-end. A contender remains British orthopedics maker Smith & Nephew Plc (SN.L), the paper said, but it added that the buyout firms were seen as leading candidates at the final hour. Smith & Nephew (S&N) shares jumped 5 percent in early London trading on speculation it would not be drawn into overpaying for Biomet and that it might become a bid target itself. S&N declined to comment. Biomet could not immediately be reached for comment. Analyst Martin Hall at brokerage Eden said the world's big three orthopedics makers -- Zimmer (NYSE:ZMH), Johnson & Johnson (NYSE:JNJ) and Stryker (NYSE:SYK) -- could all be potential bidders for S&N. "If one of the others, or private equity firms, go for Biomet, I think there's a greater chance one of the big three (Zimmer, Stryker or Johnson & Johnson) would move in to break up Smith & Nephew," he said. At 0910 GMT, S&N shares were up 4 percent at 502 pence, the biggest rise on the UK's benchmark FTSE 100 index (^FTSE). Biomet said in April it had hired Morgan Stanley to explore strategic options, a week after long-time Chief Executive Officer and company founder Dane Miller abruptly resigned. Sources familiar with the situation told Reuters earlier this month that S&N planned to bid about $11 billion for Biomet. S&N Chief Executive Chris O'Donnell has said in the past he saw disadvantages to S&N being smaller than its major U.S. rivals and economies of scale could help improve margins. But he has also cautioned that achieving cost savings in sales forces would not be easy, given the specialist nature of the products being sold. Biomet has a market share of about $10.3 billion based on its closing share price on Friday of $41.98. (Additional reporting by Mark Potter in London)
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