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Smith & Nephew shares rise 7% after activist investor Cevian announces stake

  • Smith & Nephew was the biggest riser in the FTSE 100 on Thursday

Smith & Nephew shares rise 7% after activist investor Cevian announces stake

Responsible: Deepak Nath is CEO of Smith & Nephew

Smith & Nephew shares jumped to the top of the FTSE 100’s movers and shakers list on Thursday after activist investor Cevian Capital announced a 5 percent stake in the medical device maker.

Cevian’s recently announced stake would make it the second-largest shareholder in Smith & Nephew, a company known for acquiring stakes in companies and demanding change.

Friederike Helfer, partner at Cevian Capital, said in a statement: “Smith & Nephew fundamentally owns attractive companies in structurally growing markets, but the company has not created value for shareholders for many years.”

He added: “Cevian sees the potential to create significant long-term value by improving the operating performance of the Company’s businesses.”

“We have high expectations of the board and management to exploit this potential.”

Smith & Nephew shares rose 7.2 percent, or 71.01 pence, to 1,057.21 pence on Thursday, after falling more than 11 percent over the past year.

The London-based company has lost more than 50 percent of its share value since reaching an all-time high in February 2020.

Smith & Nephew said it would continue dialogue with Cevian “as it does with all its shareholders,” but did not provide further details as the discussions were confidential.

In 2022, Smith & Nephew launched a transformation plan to grow its hip and knee implants, wound care and sports medicine businesses while increasing margins.

Cevian is the third-largest shareholder in Irish building materials group CRH, which last year abandoned its primary listing in London in favor of a listing in New York.

In addition, the company is the largest shareholder in global education conglomerate Pearson, which reportedly came under pressure from investors to delay its IPO last year.

Cevian sold its entire stake in Aviva last year and ended its campaign to increase investor distributions at the FSTE 100-listed insurer.

Russ Mould, investment director at AJ Bell, said: “Activist investors often circle struggling companies, so the news that Swedish company Cevian has acquired a stake in medical technology company Smith & Nephew should come as no great surprise.”

“Cevian has already acquired stakes in UBS, Vodafone and Aviva in the past to force change. One argument for doing the same at Smith & Nephew is the share price decline of almost 40 percent over the last five years.”

He added: “The positive share price reaction to Cevian’s investment in Smith & Nephew shows that the market believes an external catalyst for a restructuring of the company would not be a bad thing.”

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