UK Edition
Smith & Nephew to hand cash back to shareholders after selling gynaecology unit
Smith & Nephew is selling its gynaecology unit to medical device maker Medtronic for $350m (£240m), and will return the bulk of the cash windfall to shareholders.
Olivier Bohuon, chief executive of the FTSE 100-listed orthopaedics giant, said the funds generated from the sale were more than the company needed. Accordingly, $300m will be returned to investors through a share buy-back programme, expected to begin in July.
The gynaecology unit makes a device called Trueclear, which allows doctors to perform keyhole surgical procedures inside the uterus, such as polyp removal, fibroid extraction and biopsies.
Gynaecology is a small part of Smith & Nephew's overall business, accounting for just 1pc of group sales in 2015.
Mr Bohuon said: "Smith & Nephew's management team has a strong track record of creating value through organic growth and by acquisition. The sale of our gynaecology business demonstrates our disciplined strategic approach to capital deployment and to crystallising value through divestiture at the right time."
He added that the gynaecology business had garnered "strong interest" from potential buyers and had therefore fetched a good price.
"Our shareholders will benefit directly from the return of the proceeds. Gynaecology and its employees will benefit from a new owner looking to take the business to the next level," he said.
It is expected that the majority of the gynaecology division's employees will join Medtronic. Smith & Nephew will continue to manufacture the Truclear system for Medtronic for a period of time.
Smith & Nephew, Europe's biggest maker of artificial knees and hips, plans to ramp up growth this year with a number of acquisitions and "disruptive" product launches in areas such as biological wound care and sports medicine surgery.
Last year, the company bought five businesses, including surgical robotics company Blue Belt technologies for $275m in October.