Business Reshaping

Smith & Nephew Plc
28 June 2000

                       MAJOR STEPS IN BUSINESS RESHAPING

Smith  & Nephew plc, the global medical devices company, today announces major
steps  in  transforming its business into a higher growth company  focused  on
technologically advanced medical devices.  These are:

-    The disposal of its consumer products business for £235m involving:

     -    The sale of the feminine hygiene and toiletries products business to
          a  management buyout team backed by ABN AMRO Capital for £140m cash.
          The new company will trade as Accantia Health & Beauty Limited.
     
     -    The  sale  to  Beiersdorf  AG of the first  aid  dressings  products
          business  -  the  Elastoplast brand - and of the Nivea  distribution
          business.

-    The creation of a more efficient capital structure through the return  of
     £415m of cash to shareholders by way of a special dividend of 37.14p  per
     share,  coupled with a revised dividend policy to support  the  company's
     strategic growth aims.

-    In  addition, Smith & Nephew announces that it is in advanced negotiation
     with Beiersdorf AG to acquire Beiersdorf AG's advanced woundcare business
     and  to  form  a joint venture with them for both companies'  traditional
     woundcare, casting, bandaging and compression hosiery businesses.

Chris  O'Donnell, Chief Executive said:  'These are significant steps  in  the
fundamental reshaping of our business.  The aim is for Smith & Nephew to focus
on  faster growing and technologically advanced products in the medical device
areas  of  orthopaedics, endoscopy and wound management.  These are  areas  of
considerable potential and growth.

We  are intent on increasing value for our shareholders not only through  this
business  repositioning,  but also by implementing a  more  efficient  capital
structure.   We  have  therefore  announced  today  our  proposal  to  make  a
significant  return  of capital to shareholders, and put in  place  a  revised
dividend policy.

Following  completion of the steps announced today, Smith & Nephew's  business
will  be focused on medical devices, with the group having the cash generative
capacity to finance both organic growth and acquisitions.'

Introduction

Today's  announcement marks a major step in the strategy announced by Smith  &
Nephew  18  months ago to reshape its business into a global  medical  devices
business focused on higher growth areas.  Since December 1998, it has  put  in
place  a substantial workforce restructuring and manufacturing rationalisation
programme   to  improve  margins,  and  made  a  number  of  divestments   and
acquisitions.   The  group  has become world leader in  wound  management  and
arthroscopy, and is one of the top four in orthopaedics.

The  three-year reshaping plan is delivering a step-change in Smith & Nephew's
performance.  The group has set clear financial targets to achieve high single
digit  earnings growth in the three years to 2001, and to improve  margins  by
three percentage points to 17% by that date.  For 1999, the first year of  the
new  strategy, it achieved EPS growth of 12% and improved margins in line with
the  plan.  Trading for the year to date is up to expectations with underlying
sales growing at around 7.5%.  Margin improvements are on track.

The  steps announced today will continue the transformation of Smith & Nephew.
The  company's  exit from the consumer market place will allow  the  group  to
achieve  a  clear  focus on medical devices. There will be  a  small  dilutive
impact  on  first  full  year earnings but stronger  growth  thereafter.   The
capital  restructuring will improve the cash generative position of the  group
and set a platform for accelerated growth.

Exit from the consumer business

In  furtherance  of  its  strategy of focusing on its  higher  growth  medical
devices businesses, Smith & Nephew is to dispose of its consumer business  for
a  total  consideration of £235m.  By joining companies dedicated to  consumer
goods,  the group's consumer products businesses will be provided with greater
opportunity to develop.

Feminine hygiene and toiletries
The feminine hygiene and toiletries business, including the leading brands  of
Lil-lets and Simple, are to be sold to a management buyout team backed by  ABN
AMRO Capital for £140m cash.  The new company will trade as Accantia Health  &
Beauty Limited.

This  business  had  sales of £86m in 1999, and generated  £18m  of  operating
profit.   The disposal includes the factory sites in Birmingham and  Corby  in
the  UK.  Net tangible assets attributed to these businesses were £38m  at  31
December 1999.  Some 510 employees will be transferred with the business.

Elastoplast and Nivea distribution
Beiersdorf AG will purchase the first aid dressings business - the Elastoplast
brand  -  and the Nivea distribution business for £80m in cash.  The agreement
to distribute Nivea in the UK and British Commonwealth on behalf of Beiersdorf
AG  was  due for renewal in the majority of markets at the end of  2001.   The
first  aid  dressing  business  had a turnover  of  £32m  in  1999  and  Nivea
distribution had sales of £67m.  They made combined operating profits of  £9m.
The  net  tangible assets attributed to these businesses at 31  December  1999
were £28m.  Some 240 employees will be transferred with this business.

The  completions of both consumer business transactions are expected to  occur
on  30  June  2000, with the exception of Ireland, Australia, New Zealand  and
South  Africa  where  completion  and proceeds  of  £35m  are  conditional  on
competition   clearances.   In  addition,  Smith   &   Nephew   will   collect
approximately £15m of residual working capital.

Intended acquisition of the advanced woundcare business of Beiersdorf  AG  and
the intended formation of a joint venture with Beiersdorf AG

Smith  &  Nephew  is  negotiating with Beiersdorf AG for  the  acquisition  of
Beiersdorf  AG's  advanced woundcare business.  This  business  has  sales  of
approximately  £33m.   Additionally Smith  &  Nephew  and  Beiersdorf  AG  are
negotiating  to  inject  approximately £150m each of  their  more  mature  and
traditional woundcare, casting, bandaging and compression hosiery sales into a
joint   venture.   These  two  transactions  would  be  expected  to  generate
significant rationalisation benefits.

Negotiations  are  progressing well and both parties are confident  that  they
will  reach  a successful conclusion.  However, a further announcement  should
not  be expected before the end of August to enable issues concerning business
structure and competition clearances to be clarified.

Capital structure and dividend

The  key purpose behind the reshaping of the business is to enhance the growth
prospects of Smith & Nephew.  Following the sale of the consumer business, the
Board intends to adopt a more efficient capital and cash generative structure.

The Board is proposing to return £415m of capital to shareholders by way of  a
special dividend, together with a related consolidation of the company's share
capital.   The consolidation will take the form of the conversion into  9  new
shares of every 11 in issue.  Approval for the consolidation will be sought at
an  Extraordinary General Meeting of shareholders to whom notice will be  sent
shortly.

Moreover, the Board intends to adopt a dividend cover on a per share basis  in
the  region of 2.5x for this year which is expected to lead to a reduction  in
the  dividend  per share of approximately one-third for the current  financial
year.

Effect on Smith & Nephew

With  the  divestment of Consumer, the total sales of the group on a  proforma
basis  for 1999 would have been £891m, with the geographic focus of the  group
changing  so  that 50% of its business would have been in America  (previously
43%).

The effect on earnings per share will be of a small dilution in the first full
year, and accretive thereafter.

The exceptional gain on the disposal of the consumer businesses will be of the
order  of £108m,  after £23m of divestment and transaction costs, and £32m  of
acquired goodwill previously written off.

Net debt after the transactions and the special dividend will be approximately
£250m,  financed by medium term syndicated bank borrowings.  Interest on  debt
will be covered approximately 8 times.


Enquiries:
Chris O'Donnell, Chief Executive                 Tel: [phone]
Smith & Nephew plc                               Fax: [phone]

Peter Hooley, Finance Director                   Tel: [phone]
Smith & Nephew plc                               Fax: [phone]

Nicholas Shott                                   Tel: [phone]
Lazard                                           Fax: [phone]

David Yates                                      Tel: [phone]
Financial Dynamics (for Smith & Nephew)          Fax: [phone]

Ian Taylor, Chief Executive                      Tel: [phone]
ABN AMRO Capital

Geoffrey Percy, Chief Executive                  Tel: [phone]
Accantia

Fergus Wheeler                                   Tel: [phone]
Financial Dynamics (for ABN AMRO Capital)        Fax: [phone]


A  presentation will be held for analysts at 4.30pm today, Wednesday  28  June
2000,  at Heron House, 15 Adam Street, London WC2N 6LA.  Analysts not able  to
attend the presentation can join it via conference call, for details of  which
please call Mo Noonan on 0207 269 7116.