Smith & Nephew/ArthroCare

The deal: Smith & Nephew snags ArthroCare
The price tag: $1.5 billion
Inversion? No
Status: Closed in May 2014

Why it matters: This transaction would have been among 2013's largest if it was announced a couple of months earlier. But it barely made the list due to the ensuing med tech merger mania, including some larger ortho mergers that Smith & Nephew ($SNN) itself helped to spur by purchasing the U.K.'s sports medicine-focused ArthroCare.

S&N is aiming to have two-thirds of its business in high-growth areas, CEO Olivier Bohuon said during its Q2 conference call last year. Emerging markets, sports medicine, trauma and extremities, gynecology and advanced wound devices are its higher growth businesses, while reconstruction, advanced wound care and enabling technologies are all defined as lower growth in established markets.

Smith & Nephew CEO Olivier Bohuon

In addition to valuing ArthroCare's strength in sports medicine orthopedics, S&N believes the company's ear, nose and throat devices will provide welcome diversification.

Since the deal's announcement, S&N's stock is up almost 30%. But that's mainly due to relentless rumors that Stryker ($SYK) will purchase the remaining midsized orthopedics player to counter Zimmer's ($ZMH) acquisition of Biomet. Even Medtronic ($MDT) was rumored to be interested in S&N, but it is too busy digesting newly purchased Covidien to be a realistic bidder.

Will the S&N/Stryker combination be the first big med tech M&A announcement of 2015 (excluding Pfizer's ($PFE) purchase of infusion pump maker Hospira ($HSP), which was bought for its pharma offerings and biosimilar pipeline)? If the long-rumored S&N/Stryker deal occurs, keep an eye out for a possible inversion element given the U.K.'s lower corporate tax rate.

Previously announced med tech deals seem to be withstanding the new Treasury Department rules designed to deter inversions (but not Big Pharma AbbVie's ($ABBV) canceled bid for Shire ($SHPG)). However, the pace of new inversion deals has gone down since their announcement.

A Stryker bid for the $16 billion S&N would make quite a splash, making it a good test for the new inversion rules. More generally, a bid would signal that the appetite for big deals is still strong heading into 2015.

For more:
Special Report: Med tech M&A gets much, much bigger during the first half - Smith & Nephew nabs ArthroCare
Wall Street, media approve of Stryker's multi-year buying spree
Smith & Nephew clears a major U.S. regulatory hurdle for ArthroCare merger
Smith & Nephew will grab ArthroCare for $1.7B, continuing its M&A rebound plan

Smith & Nephew/ArthroCare