A Done Deal?

Perhaps not.

Bloomberg reported that the deal, however, might be at risk of counter offers. Being the lowest premium for a medical instruments company since the 1990s, Smith & Nephew’s bid is allowing Stryker Corp. and Johnson & Johnson an opportunity for a rival offer.

“There are a lot of reasons why a bigger company would want this,” David Turkaly, a New York, N.Y.-based analyst at JMP Group Inc., told Bloomberg. “Could somebody pay more than $1.7 billion for ArthroCare? I think the answer could be yes.”

JMP Group estimated that ArthroCare could get about $55 a share in a sale because of its high-margin assets in sports medicine and the chance to expand international sales. JMP analysts also said that Zimmer Holdings Inc., a $16 billion maker of orthopedic and dental reconstruction implants, could be interested in ArthroCare. In addition to gaining high-margin assets, acquirers with a more global presence may see an opportunity to expand ArthroCare’s international sales, which make up about a third of its annual revenue, Turkaly said.

It didn’t take long for the sharks to begin circling. A few law firms already have jumped into the mix, crying foul for ArthroCare shareholders.

Former attorney for the U.S. Securities and Exchange Commission, Willie Briscoe, and the Dallas, Texas-based securities litigation firm of Powers Taylor LLP are investigating potential claims against the ArthroCare board related to the acquisition.

Robbins Arroyo LLP also is investigating into the deal, charging that ArthroCare’s shareholders might be getting the short end of the stick.

“As an initial matter, the $48.25 merger consideration is substantially below the three target prices including a price of $60 set by an analyst at Craig-Hallum Capital Group on Jan. 8, 2014, and a price of $56 set by an analyst at Canaccord Genuity on Jan. 7,” according to statement from Robbins Arroyo. “In addition, the $48.25 merger consideration represents a premium to shareholders of 6 percent based on the company’s closing price on Jan. 31, 2014.”This one-day premium is significantly below the average one-day premium of over 35 percent for comparable transactions in the last three years. In addition, ArthroCare shares traded above the offer price as recently as Jan. 27, 2014, and reached a high of $49.95 on Jan. 8, 2014.”