Shares in Smith & Nephew PLC (SN.LN) gained more than 12% Monday following reports the U.K. medical device maker received and rejected a bid approach from U.S. healthcare giant Johnson & Johnson (JNJ) late last year, without informing shareholders.

Sky News reported on its website Saturday that Johnson & Johnson approached Smith & Nephew in December with a proposal pitched at 750 pence a share, valuing the company at roughly GBP7 billion. It didn't say where it got the information.

The Financial Times newspaper, citing unidentified people close to Smith & Nephew, said the company rejected a 750 pence to 800 pence a share proposal as too low.

Spokesmen for Smith & Nephew and Johnson & Johnson could not immediately be reached for comment.

At 0948 GMT, shares in Smith & Nephew were 79 pence or 12.1% higher at 729 pence, making it the biggest riser in a lower FTSE 100, down 0.3%.

Smith & Nephew has been the subject of persistent takeover speculation for years, with U.S. rivals in the market for replacement hips and knees like Zimmer Holdings Inc. (ZMH) and privately-held Biomet Inc. frequently touted as possible suitors.

Johnson & Johnson also sells replacement joints through its DePuy subsidiary.

Some analysts said an offer price of at least 900 pence per share would be more realistic for the U.K. medical device maker.

"To us, an offer above 900p would be a fairer price for a change of control," said Panmure analyst Savvas Neophytou, while reiterating a buy recommendation and 750 pence price target for the stock.

Investec agreed. "Johnson & Johnson is a credible bidder, has plenty of firepower and with other parties likely to be interested, we think an offer of north of 900p is possible," the broker said in a note while maintaining a buy rating and 703p target price.

Analysts at UBS said any bid from J&J for Smith & Nephew would likely attract the attention of antitrust authorities in the U.S. and Europe, who may require the companies to sell assets to clear the deal.

Analysts at Bernstein said an approach by Biomet's private equity owners for Smith & Nephew is more plausible. Biomet couldn't be reached for comment.

-By Jason Douglas, Dow Jones Newswires; 44-20-7842-9272; jason.douglas@dowjones.com

(Sten Stovall contributed to this article.)
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