Hints and tips:
...Smith & Nephew edged 0.4 per cent higher to £11.15 after US regulators set out terms for the purchase of Biomet by US peer Zimmer....
...“Using industry typical merger synergies […] we mechanically calculate a value of such synergies at circa 250p to 300p per S&N share.”...
...“Despite limited synergies and execution risk, a deal would boost earnings per share and more importantly, help solve Inbev’s volume issue. Tempting....
...Executives said they expected to achieve $270m in synergies over three years, as the combined company allows for improved cross-selling opportunities....
...It also said that a takeover by privately owned peer Biomet would be unattractive given potential market share loss and limited synergies....
...The question, however, is not whether Biomet wants S&N, but whether it can afford it....
...The companies would also be able to extract synergies from SG&A costs and central functions, as well as leveraging JNJ’s larger sales force to increase sales of Smith & Nephew’s strong hip and knee product...
...Biomet, a private equity rival, has been touted as a potential merger partner for S&N in recent weeks....
...RBS reckons it could work: We believe a merger between the two companies would make strategic sense and create significant cost synergies in purchasing, manufacturing, SG&A, etc....
...And some Smith & Nephew investors have argued that a combination with Biomet may not produce synergies high enough to justify the rise in the company’s share price. Tactics will be key....
...And Mr Illingworth has a ready target: Biomet, the US-based rival owned by a quartet of buy-out firms. The synergies would be substantial....
...Thedeal will almost certainly require an in-depth investigation and remedies before it’s approved, reckons Olivetree: Synergies would be excellent, but the focus here should be on solving the anti-trust...
...They point out, as I and others have, that the €3.5bn of synergies pencilled in look aggressive for an in-market deal, let alone a cross-border one....
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