Smith & Nephew Acquires BlueSky

Smith & Nephew announced Thursday that it’s buying BlueSky Medical Group Inc. of Carlsbad, Calif., in an effort to expand its wound therapy business.

Smith & Nephew, a British medical device maker with major operations in Memphis, is paying an initial $15 million and has agreed to pay up to $95 million more if revenue goals and other conditions are met.

BlueSky is a privately held company whose signature products are small pumps that apply gentle suction to diabetic ulcers and other hard-to-heal wounds.

The suction promotes healing, but it’s unclear how, said Raj Denhoy, an analyst with Piper Jaffray in New York.

He said the BlueSky acquisition is a good move for Smith & Nephew.

“They have expressed desire to do acquisitions to sort of expand their revenue base, and I think this fits nicely,” he said.

But he said there are some unanswered questions about the deal, including possible fallout from a patent infringement lawsuit against BlueSky from rival firm Kinetic Concepts Inc.

A court has ruled in BlueSky’s favor, but Kinetic Concepts is appealing.

Smith & Nephew managers said in a statement that they don’t believe BlueSky’s products infringe the patents.

The acquisition is unlikely to have a large impact in Memphis, the home of Smith & Nephew’s orthopedic units. The firm’s advanced wound care management division is headquartered in Hull, England.

Smith & Nephew is a mid-sized firm and has been looking to grow for years. Last year it missed a big chance to expand when the board of Biomet Inc. turned down a purchase offer worth roughly $11.2 billion.

Since then, Smith & Nephew managers have been looking for smaller acquisitions.

In March, Smith & Nephew announced that it would spend $889 million for the Swiss orthopedics company Plus Orthopedics Holding AG.

SOURCE: COMMERCIALAPPEAL.COM