October 23, 2017 / 2:18 PM / a year ago

UPDATE 1-Smith & Nephew to buy Rotation Medical for up to $210 mln

(Adds detail, more on S&N as potential takeover target)

LONDON, Oct 23 (Reuters) - Medical technology group Smith & Nephew, which some investors believe should streamline operations to make itself a more attractive takeover target, said on Monday it was buying a U.S. sports injury business for up to $210 million.

The British company, best known for its replacement hips and knees, will pay an initial $125 million to acquire unlisted Minnesota-based Rotation Medical, plus up to $85 million over the next five years if certain financial targets are hit.

S&N said the deal, which is expected to close late this year, would be neutral for earnings in 2018 and boost them in 2019.

Rotation has developed a novel tissue regeneration technology for shoulder rotator cuff repair that is already cleared for sale in the United States. A filing is being prepared for approval in Europe.

Rotator cuff injuries typically occur in people who repeatedly perform overhead motions, either in sport or in their jobs.

S&N CEO Olivier Bohuon said Rotation's repair system was "highly complementary" to the group's established sports medicine portfolio, which includes mechanical anchors to help with shoulder damage.

The British company, valued at around 12.5 billion pounds ($16.5 billion), is a relatively small player in a medtech world dominated by U.S. companies like Stryker, Johnson & Johnson and Zimmer Biomet. As a result, it has long been a target of takeover speculation.

The Financial Times reported last week that a unit of Paul Singer's activist fund Elliott Management had built a small stake in S&N and pushed for the divestment of parts of its business to make the company a more suitable bid target.

S&N and Elliott have both declined to comment on the situation. UK disclosure rules generally require companies to report a shareholding of more than 3 percent.

$1 = 0.7584 pounds Reporting by Ben Hirschler; editing by Jason Neely and Ralph Boulton

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