Smith & Nephew confident on strategy after report says investors urge break-up

(Reuters) -Smith & Nephew said on Thursday it was confident it was on the right course after the Financial Times reported that three major investors were pushing for a break-up of the medical device maker.

The UK-headquartered company should spin off its orthopaedics division, which makes replacement hip and knee joints, if management could not improve its performance, the group’s top 20 shareholders told the FT.

A Smith & Nephew spokesperson said: “There is clear momentum across the business, with operational fixes in place, sharper commercial execution – including in US Orthopaedics where both our Knee and Hip Implants have returned to growth.”

Britain’s largest medical products maker by market value, Smith & Nephew slashed its annual underlying revenue growth forecast in October on weak China demand.

“While the impact of China was a challenge for us in the quarter, we are confident we are on the right course,” the spokesperson said.

Shares in Smith & Nephew, which have lost about 11% of their value so far this year, were flat in early trade.

A private equity firm could be a potential buyer for the division, which is the largest for Smith & Nephew in terms of revenue, the FT reported, citing two investors.

Activist investor Cevian had built a 5% shareholding in Smith & Nephew in July, making it the second-largest shareholder of the medical device maker, according to LSEG data.

The FT report did not name the shareholders.

(Reporting by Devika Nair and Prerna Bedi in Bengaluru; additional reporting by Yadarisa Shabong; Editing by Subhranshu Sahu and Jane Merriman)