Smith+Nephew cuts outlook after failed orthopaedics deal talks with J&J

‌Smith+Nephew cut its full-year revenue and profit forecast on Wednesday as the British medical device maker also confirmed that talks about a potential merger with Johnson & Johnson's orthopaedics unit have ended.

The forecast cut ‌follows weaker-than-expected third-quarter growth in Smith+Nephew's biggest orthopaedics business, which has been plagued by years ‌of weak performance, prompting it to seek options for the business, including with J&J. Smith+Nephew had approached the US healthcare group earlier this year with an offer valuing the latter's hip and knee replacement unit at as ⁠much ​as $22 billion, almost ⁠double its own £9.4 billion market value, a person familiar with the matter told Reuters in October.

The discussions, however, collapsed ⁠after the parties could not come to an agreement over who would run the enlarged group, the ​person said. Smith+Nephew did not provide any details on Wednesday of why the talks ⁠ended. Shares of the FTSE 100 firm were down 1.7% in early trade.

Smith+Nephew said it will continue to explore ⁠strategic options ​for its orthopaedics arm, which accounts for about 40% of its annual sales, and forecast a continued slowdown in the business through the final quarter. "The confirmation that it ⁠is exploring strategic options (even if slightly indefinite wording) is likely to be welcomed by bulls, ⁠although bears might ⁠question the timeline and who might actually be interested in buying ortho (against the backdrop of a weaker market)," J.P. Morgan analysts said in ‌a note.