US rival in Smith and Nephew bid

Another major UK firm is in the takeover spotlight after a report said Smith & Nephew had rejected an approach from US rival Johnson & Johnson.

The leading maker of hip and knee replacements is said to have turned down an indicative offer worth £7 billion several weeks ago, although Sky News added the American firm was still considering whether to return with a higher offer.

The speculation raises the possibility of another major British company going to an overseas rival after last year’s sale of Cadbury to US firm Kraft Foods.

Hull-based Smith & Nephew, which is listed in the FTSE 100 Index, has not made any comment on a wave of recent bid speculation.

Its shares spiked in early December amid takeover rumours but fell back on Friday after US peer Biomet – seen as another potential suitor – reported slower sales growth.

Johnson & Johnson has a medical devices division and owns a number of well-known UK household brands, including Listerine, Sudafed and Benecol.

Its approach for Smith & Nephew valued the UK firm at 750p a share but this was rejected on the grounds it substantially undervalued the firm, Sky said. Smith also specialises in wound-care products such as dressings and gels.

It is thought that if Johnson & Johnson returned with a higher offer, then the likes of Biomet and rivals such as Stryker and Zimmer may also be interested.