Smith & Nephew Faces Shareholder Pressure for Break-Up

Smith & Nephew is facing mounting pressure from major shareholders, including activist investor Cevian Capital, to consider a break-up of the company if it cannot improve performance. The shareholders are specifically urging the spin-off of its orthopaedics division, which is the largest revenue generator but has been slow-growing and has lost market share in the U.S. This call for action follows a significant decline in the company’s share price, which has dropped over 13% since the announcement of reduced revenue growth forecasts due to weak demand from China. Chairman Rupert Soames defended the company’s current strategy, asserting that it has a well-formed plan encompassing all three business lines, despite the challenges. The orthopaedics division accounts for nearly 40% of Smith & Nephew's $5.5 billion annual turnover, and investors believe that a private equity firm could potentially buy it. The company's shares have fallen by more than 40% over the last five years amid executive turnover and underperformance in this key division.