Shares in Smith & Nephew PLC (LSE:SN) jumped after it was revealed that activist investor Cevian Capital has built a stake in the replacement hip and knee maker.
The Swedish hedge fund, which has previously taken positions in Aviva, Vodafone, Pearson and RSA Insurance, declared a stake of 5.02%.
S&N shares, which hit almost a decade low last year and have fallen around 19% over the past 12 months, jumped 6.5% to 1,050.5p in early trades on Thursday.
Cevian partner Friederike Helfer said: "Smith & Nephew owns fundamentally attractive businesses in structurally growing markets, but the company has not generated shareholder value for many years.
"Cevian sees the potential to create significant long-term value by improving the operating performance of the company’s businesses. We have high expectations for the board and management to realize this potential."
Cevian's strategy is to acquire significant minority ownership positions in European public companies and "work as an owner" to improve value.
According to its website, the fund acquires stakes in companies that it believes have strong market positions, good cashflow and long-term demand dynamics and "are overlooked, misunderstood or out-of-favor with investors".
** Update: Adds comment from Cevian **