Re Joint Venture

Smith & Nephew Plc
2 November 2000

                                       
   SMITH & NEPHEW FORMS JOINT VENTURE WITH BEIERSDORF AND BUYS BEIERSDORF'S
                          ADVANCED WOUNDCARE BUSINESS

-Creation of a major global medical products joint venture with Beiersdorf.
-Acquisition of Beiersdorf's advanced woundcare business for £30m.
-Proposed divestment of Ear, Nose & Throat business.
-EPS growth target increased.

Smith & Nephew, the global medical devices company, and Beiersdorf AG today
announce the creation of a global joint venture that will combine their
traditional woundcare, casting, bandaging and phlebology businesses and have
pro forma annual sales in excess of £300m.  Smith & Nephew has also agreed to
acquire the advanced woundcare business of Beiersdorf for £30m in cash.
Completion of each of these transactions is conditional upon standard closing
conditions, including the receipt of competition clearances.  The transactions
are inter-conditional.  It is planned that the joint venture will commence
operations on 2 April 2001.

Joint Venture

The joint venture will be 50% owned by each parent company.  It will be
independently managed by a team drawn from both parents led by Chief
Executive, Graham Siddle, who until recently was Group Commercial Director of
Smith & Nephew.  Smith & Nephew and Beiersdorf will transfer respectively into
the joint venture approximately £145m and £165m of sales, from which they
generated £17m and £18m of operating profits respectively in 1999.  Profits
will be shared equally between Smith & Nephew and Beiersdorf.

The joint venture will be headquartered in Germany and will have independent
sales and distribution resources in its key markets of Germany, the UK, US,
France and the Netherlands.  Initially, it will share the selling resources of
both parents in other countries.  Some 65% of sales of the joint venture will
be in Europe and 15% in the US.  The joint venture will have approximately
3,000 employees, with manufacturing facilities in the UK, US, Germany, France,
Ireland, South Africa, Mexico, India and Pakistan.

Part of Smith & Nephew's existing manufacturing rationalisation programme will
be absorbed into the joint venture which will also further rationalise
manufacturing and selling resources on a global scale.

The joint venture agreement provides flexibility for both parents' continuing
involvement after the first five years. Net tangible assets, as at 31 December
1999, of approximately £70m will be contributed by Smith & Nephew and £50m by
Beiersdorf to the joint venture, net of £10m of debt being introduced by each
parent.

Advanced Woundcare

Smith & Nephew is a world leader in the provision of advanced woundcare
products. The acquisition of Beiersdorf's complementary advanced woundcare
business will provide it with critical mass in certain key markets,
particularly in Germany.  In addition, with brands such as the Cutinova moist
wound healing products and Leukostrip/clip for wound closure, it will
strengthen Smith & Nephew's product portfolio and R&D capability.
Beiersdorf's advanced woundcare business generated operating profits of £3m in
1999 from sales of £35m and net tangible assets of £7m.

Future of ENT and Rehabilitation

To complete its strategy to become a global advanced medical devices company
with higher growth potential, Smith & Nephew intends to dispose of its ear,
nose and throat (ENT) business in the next 12 months. With annual sales of
approximately £30m, ENT provides implants to replace diseased bones in the
middle ear and products for head, neck and sinus surgery.

Smith & Nephew will retain its rehabilitation business and intends to use it
as a foundation to develop a fourth global business focused on providing
medical devices for the post-surgical orthopaedic and broader active
rehabilitation markets.  With sales of around £64m, and a growing market in
orthopaedic recovery, the company expects rehabilitation will make increasing
contributions to group sales and profit.

Effect on Smith & Nephew

Smith & Nephew intends to account for the joint venture using the gross equity
method.  This will involve the deconsolidation of £145m of sales, such that
the total group sales of Smith & Nephew on a pro-forma basis for 1999 would
have been £750m after these transactions, the previous disposal of the
consumer business and the intended disposal of the ENT business.  50% of the
profits of the joint venture will be included in the Group profit and loss
account.

The joint venture and the acquisition of the advanced woundcare business,
taken together, are expected to generate annual rationalisation benefits to
Smith & Nephew of £12m after three years.  The additional rationalisation
costs to Smith & Nephew will be £31m of which £3m are asset write-downs.

The effect on earnings per share in respect of the joint venture, advanced
woundcare acquisition and ENT disposal will be a small dilution in the first
year, broadly neutral in 2002 and accretive thereafter.

Chris O'Donnell, Chief Executive of Smith & Nephew, said: 'Our joint venture
with Beiersdorf creates a leading independent, global supplier of high quality
healthcare products.  We expect it to generate real value for the parent
companies from its enhanced focus.  Our acquisition of Beiersdorf's advanced
woundcare business strengthens our offering in advanced woundcare and brings a
number of excellent products and brands to our range.

'Today's announcement completes the business restructuring promised to our
shareholders at the end of 1998 and enables Smith & Nephew to concentrate on
the higher growth area of advanced medical devices.  Our plans to generate
improved shareholder value are being delivered and we are now in a position to
grow more strongly in the future.  Our first 3-year programme to deliver high
single digit underlying EPS growth is on track.  We are now setting a target
to grow underlying EPS in the mid-teens in the 3 years starting in 2002.'



Enquiries:
Chris O'Donnell, Chief Executive                 Tel: [phone]
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Peter Hooley, Finance Director                   Tel: [phone]
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Margaret Stewart, Group Director,
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Nicholas Shott                                   Tel: [phone]
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David Yates                                      Tel: [phone]
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