Smith & Nephew shares jump as activist investor buys stake
Cevian has become the medical equipment firm’s second biggest shareholder after snapping up a 5% holding.
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Shares in knee and hip replacement maker Smith & Nephew have surged after activist investor Cevian revealed it has taken a stake in the group.
Cevian is now the medical equipment firm’s second biggest shareholder after snapping up a 5% holding, sending shares in Smith & Nephew jumping more than 7% on Thursday.
Swedish group Cevian is renowned for taking stakes in firms and then pressing for change and to boost returns to investors.
FTSE 100-listed Smith & Nephew has seen its shares come under pressure since hitting an all-time high in 2020 as it has struggled to grow its profitability in the face of soaring costs and delays to operations following the pandemic.
Cevian sees the potential to create significant long-term value by improving the operating performance of the company’s businesses. We have high expectations for the board and management to realise this potential
Friederike Helfer, a partner at Cevian Capital, said: “Smith & Nephew owns fundamentally attractive businesses in structurally growing markets, but the company has not generated shareholder value for many years.
“Cevian sees the potential to create significant long-term value by improving the operating performance of the company’s businesses.
“We have high expectations for the board and management to realise this potential.”
A spokesman for Smith & Nephew said the firm would “have an open dialogue with our shareholders and will continue to engage with Cevian, as we do with all of our shareholders”.
Cevian’s other high-profile investments include Irish building materials firm CRH, which switched its primary London listing to New York last year.
The positive share price reaction to Cevian taking a position in Smith & Nephew demonstrates the market thinks an outside catalyst for a shake-up of the business would be no bad thing
It is also an investor in Pearson and last year sold down its stake in insurance giant Aviva, having pushed for increased investor returns at the group.
AJ Bell investment director Russ Mould said: “Cevian has previously taken positions in UBS, Vodafone and Aviva in an attempt to force change and the case for doing so at Smith & Nephew is presented by a near-40% decline in the share price over the last five years.
“The positive share price reaction to Cevian taking a position in Smith & Nephew demonstrates the market thinks an outside catalyst for a shake-up of the business would be no bad thing.”
He added: “Cevian is likely to hold management’s feet to the fire and may look for more ambitious targets than set out under the existing improvement plan.
“It could also push for a rationalisation of the company’s portfolio, which encompasses sports medicine and wound care alongside orthopaedics.”