FORT WAYNE – The latest rumor in orthopedics circles is that Warsaw-based Biomet Inc. is trying to acquire rival Smith & Nephew Inc.
The Financial Times of London, Indianapolis Business Journal and industry watcher PearlDiver have reported the speculation.
But on Wednesday a veteran industry analyst pooh-poohed the idea to The Journal Gazette.
“These are trade rumors, which are notoriously wrong,” said Robin Young, founder of Fort Wayne-based orthopedic-data firm PearlDiver.
“I would not take it seriously. It’s in our newsletter more for entertainment value than anything.”
A Biomet spokesman didn’t return messages seeking comment. A company spokesman told PearlDiver that Biomet doesn’t respond to market rumors.
But Young said several dynamics point toward general industry consolidation, including the new health care law and restrictive reimbursement rules.
In these “unsettled times,” he expects some midsized orthopedics players to make acquisition offers, using cash they’ve hoarded during the economic downturn.
Biomet and London-based Smith & Nephew are both smaller than the most likely acquirers, Young said.
Stryker Corp., which led the industry in 2008 with $6.7 billion in revenue, and Medtronic, which reported $3.4 billion in sales, have also been the subject of rumors, according to Young.
According to a revenue chart prepared by PearlDiver, Biomet in 2008 reported almost $2.4 billion in revenue while Smith & Nephew reported $3.8 billion.
The latter number includes sales from Smith & Nephew’s wound-care business, Young said.
Apparently, some insiders see potential synergy from joining Biomet with Smith & Nephew.
Smith & Nephew tried to buy Biomet in 2006 but lost to an $11 billion offer by a private-equity consortium that included Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts and the Texas Pacific Group.
Dane Miller, one of Biomet’s founders, also had a stake in the acquisition.
