Smith & Nephew's £87m deal

MEDICAL devices firm Smith & Nephew has sold its rehabilitation business, which targets the physiotherapy market, in a £87m deal. The group is selling the division to US firm AbilityOne for £71m in cash, while it will retain a 21.5% interest in the enlarged business.

AbilityOne, which trades as SammonsPreston and is majority-owned by private equity firm One Equity Partners, supplies rehabilitation products such as splints and electrotherapy products to hospitals, nursing homes and clinics in the US.

The combined business will have its headquarters in Bolingbrook, Illinois, and will have a UK operation at Kirkby-in-Ashfield, Nottinghamshire.

Smith & Nephew will use cash from the sale of the business, which generated sales of £75m on operating profits of £10.5m last year, to reduce debt.

Chris O'Donnell, chief executive, said: 'Whilst we have chosen not to invest more deeply in the rehabilitation business, we believe that substantial value can be created by the enlarged AbilityOne and will retain a 21.5% interest in it. The combined business will be a market leader.'

The deal marks another step in the transformation of Smith & Nephew which last year sold the consumer arm of its business that produced Elastoplast plasters and Lil-lets tampons.