Acquisition

SMITH & NEPHEW PLC
26 July 1999


SMITH & NEPHEW TO ACQUIRE EXOGEN

Smith & Nephew plc, the worldwide healthcare group,
announces a further strengthening of its orthopaedic 
business, having reached agreement with the Board of 
Directors of Exogen, Inc. on acquisition terms.  Exogen 
is a leading producer of non-invasive ultrasound devices 
for accelerated healing of bone fractures.  A tender 
offer on the NASDAQ exchange to acquire all the 
outstanding share capital of Exogen will be commenced no 
later than 30 July 1999.  The total cost to Smith & 
Nephew of acquiring the 93.6% of shares not already owned 
by the company is £40m in cash.  Exogen will be 
integrated with the Orthopaedic business of Smith & 
Nephew and is expected to be earnings neutral in its next 
financial year and earnings enhancing thereafter.

Exogen's Business
Exogen, based in the US, designs, develops, manufactures 
and markets medical devices for the non-invasive 
treatment of musculoskeletal injury and disease.  It is 
the only company to have received US Food and Drug 
Administration approval for the marketing of non-invasive 
stimulation devices for fresh fracture healing.  Exogen 
also has a portfolio of pre-clinical developments, 
including non-invasive devices for cartilage repair and 
osteoporosis treatment.

The Orthopaedic business of Smith & Nephew entered into 
an exclusive agreement with Exogen in August 1998 for the 
distribution of its ultrasound bone healing devices in 
the US, with rights to extend this to worldwide 
distribution, excluding Japan.  At the same time, Smith & 
Nephew acquired its 6.4% share in Exogen.

For the year ending 30 September 1998, Exogen had sales 
of £7.0m and a pre-tax loss of £4.6m.  In the nine months 
to 30 June 1999, sales were £6.7m, a growth of 36%, and 
the pre-tax loss reduced to £2.5m.  Net assets amounted 
to £7.7m, of which £6.1m was in cash and short-term 
investments.

Tender Offer
A tender offer for all of Exogen's outstanding common 
stock will commence no later than 30 July 1999 and is 
expected to close in September 1999.  The tender offer 
will be subject to certain government and other 
approvals, and to Smith & Nephew receiving tendered 
shares that represent at least a majority of Exogen's 
outstanding shares on a fully diluted basis, inclusive of 
Smith & Nephew's existing 6.4% holding.  Smith & Nephew 
will fund the acquisition from its existing cash 
resources.

Strategy
Smith & Nephew announced in December 1998 that, as part 
of the Group's strategy, it would prioritise investment 
in three business units with strong global prospects, 
Orthopaedics, Endoscopy and Wound Management.  The 
acquisition of Exogen, with its innovative bone healing 
technology, will further develop Smith & Nephew's 
portfolio of next generation orthopaedic products.

Commenting, Smith & Nephew's Chief Executive, Chris 
O'Donnell said 'We have worked closely with Exogen since 
commencing US distribution of their ultrasound bone 
healing devices last year.  This acquisition will 
strengthen our Orthopaedic business in this important 
emerging field'.

Exogen's Chief Executive Officer, Patrick McBrayer said 
'Exogen's proprietary ultrasound and mechanical stress 
technologies are based on the well established principle 
that bone growth is stimulated by mechanical force.  This 
advanced technology, combined with Smith & Nephew's 
worldwide distribution and marketing expertise, will 
provide a distinctive competitive presence.'