* Buys privately-held Healthpoint for $782 mln in cash
* Expands in fast-growing bioactive woundcare
* Shares down 1 pct; valuation rich, say some analysts
LONDON, Nov 28 Healthcare firm Smith & Nephew
said it would acquire privately-held U.S. firm
Healthpoint for $782 million in cash, as part of its strategy to
expand in the fast-growing area of bioactive wound care.
Healthpoint makes Santyl, an ointment that removes dead
tissue in wounds, and is in phase III trials for a treatment for
"We want to be in a growing business, to rebalance the
company as much as we can in a better growth area, and this is
definitely one of them," Chief Executive Olivier Bohuon said on
a call with reporters on Wednesday.
FTSE 100-listed S&N is best known for making artificial hips
and knees, a sector that has been impacted by the tough economic
Bohuon is keen to expand further into areas such as advanced
wound therapy, which have been performing strongly. The sector
currently makes up about 25 percent of S&N.
However, S&N shares fell as much as 2 percent at the open,
with analysts welcoming the strategic rationale but some
questioning whether S&N had overpaid for Healthpoint.
"Although this deal seems to be strategically important, the
market will look at the valuation, which at 4.1 times revenues
and 71 times EBIT will be seen as rich," said Panmure Gordon in
Bohuon defended the price paid, saying the multiple was
within the range of other acquisitions in the sector.
"We believe it's a fair price, it's a good price for
acquiring such a growing business and such a future. It's really
normal for deals done in this kind of field," said Bohuon.
Bioactives offer novel techniques to aid skin regeneration
and the treatment of hard-to-heal wounds such as diabetic
ulcers, and the deal highlights the growing importance of the
"In Healthpoint, we have found the ideal entry into this
attractive segment," said S&N.
"It is complementary on many levels, including product
range, U.S. scale and strong commercial capabilities."
Fort Worth, Texas-based Healthpoint is expected to record
$190 million revenues in 2012 and S&N expects the deal to boost
earnings from 2013, it said.
The business will integrate into S&N's advanced wound
management division, doubling that division's U.S. sales, S&N
All Healthpoint sales are currently in the U.S., though
Bohuon said the company may look to expand into other countries
in the future.
Deutsche Bank advised S&N on the transaction, and BofA
Merrill Lynch and JP Morgan advised Healthpoint.