LONDON -(Dow Jones)- U.K.-based Smith & Nephew PLC (SN.LN) took the unusual step Friday of denying it was in any takeover talks after market speculation pushed shares in Europe's largest maker of replacement knees and hips to record highs.

"Smith & Nephew has a long-standing policy of not commenting on press speculation, unless there is a regulatory obligation to do so. However, exceptionally, Smith & Nephew wishes to clarify that it is not engaged in any discussions which could lead to a merger or a takeover," the company said in a statement issued through the London Stock Exchange.

Companies are obliged by British takeover rules to inform the market of an approach if the news leaks and influences its shares.

The company issued the denial after U.K. newspaper The Daily Telegraph Friday said privately owned U.S. orthopaedics group Biomet Inc. (BMET) was set to begin informal talks with Smith & Nephew about a potential GBP15 billion merger.

Smith & Nephew has been the subject of persistent takeover speculation for years, with U.S. rivals in the market for replacement hips and knees like Biomet, Medtronic, Inc. (MDT) and Zimmer Holdings Inc. (ZMH) frequently touted as possible suitors.

The latest spurt of investor interest in the stock came Monday after Sky News reported that Johnson & Johnson (JNJ) had approached Smith & Nephew in December with a proposal pitched at 750 pence a share, valuing the company at roughly GBP7 billion. It didn't say from where it got the information. Smith & Nephew didn't comment on the report.

But resulting activity pushed Smith & Nephew's share price to an all-time-high of 739 pence Monday.

The share price fell back Friday after Smith & Nephew denied it was in M&A talks, and at 1226 GMT, stood 0.8% lower on the day, or down 5 pence at 679 pence.

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