Smith & Nephew, the UK-based medical-device maker, has remained silent this morning despite a sharp rise in its share price following speculation of a possible bid.
The company’s shares have risen more than 10 per cent in London after a Sky News report published over the weekend said Smith & Nephew rejected a bid from US rival Johnson & Johnson ‘several weeks before Christmas’.
UK stock market rules oblige companies to make a statement if, following an approach, bid speculation causes an ‘untoward’ movement in the share price.
Smith & Nephew could not be reached immediately for comment.
According to the Sky story, Johnson & Johnson approached Smith & Nephew with a bid of more than 750p a share several weeks before Christmas, valuing the company at around £7 bn ($11 bn).
The approach was rejected and Johnson & Johnson is now considering whether or not to come back with a raised offer, the report added.
The allegation that Smith & Nephew received and rejected a bid without informing shareholders has reopened the debate on when companies should be required to make bids known to the market.
It is generally accepted that companies should not have to reveal all bids they receive. But some argue that there must be something wrong with the system if boards can keep secret from shareholders a serious bid that offers a premium to market value.
Last month, De La Rue, the UK banknote maker, reluctantly told the market that it had been targeted by French competitor Oberthur Technologies weeks after an initial approach was made.