British medical technology company Smith & Nephew said Monday it has agreed to pay $1.7 billion in cash to acquire ArthroCare, which makes devices used for soft tissue repairs and joint procedures.

Under the terms of the transaction, Smith & Nephew has agreed to pay $48.25 per share for Austin-based ArthroCare—a 6 percent premium over the target’s Friday closing price. The deal is expected to close in middle of the year, pending the approval of regulators and ArthroCare’s shareholders. ArthroCare’s largest shareholder—One Equity Partners, which holds a 17 percent stake in the company—has already expressed its support for the sale.

ArthroCare makes surgical devices used in minimally invasive operations, including soft tissue repairs and procedures on large joints such as rotator cuffs. Smith & Nephew plans to fold the company’s complementary products into its own sports medicine portfolio while expanding its U.S. operations by adding ArthroCare’s ear, nose and throat business.

Smith & Nephew CEO Olivier Bohuon said last year that the company had $1.5 billion in cash on hand to use for acquisitions and cited sports medicine as an area where it hoped to grow. In announcing the deal, London-based Smith Nephew said it expects the ArthroCare purchase to yield $85 million a year in savings within three years of closing.

The sale comes less than a month after Arthrocare reached a settlement agreement with the U.S. Department of Justice over allegations that it had committed securities fraud by falsely inflating its sales figures. As part of the settlement, ArthroCare agreed to pay a $30 million fine and to participate in a two-year Justice Department compliance program.

Davis Polk & Wardwell is advising longtime client Smith & Nephew on the acquisition with a team that includes New York–based corporate partners George Bason Jr. and Michael Davis. Davis Polk advised the company last year on its combined acquisition of both Adler Mediequip and Sushrut Surgicals for an undisclosed sum. The firm also represented Smith & Nephew on an orthopedic therapies joint venture with Essex Woodlands in 2012.

Other Davis Polk attorneys working on the ArthroCare deal include executive compensation partner Jeffrey Crandall, tax partner Kathleen Ferrell and environmental law counsel Betty Moy Huber; partner Ronan Harty and counsel Michael Sohn are advising on antitrust matters. The Davis Polk associates working on the deal are Daniel Borlack, Jennifer Pinchevsky and Brian Snyder. Former Davis Polk attorney Jack Campo serves as Smith & Nephew’s chief legal officer.

ArthroCare, meanwhile, has turned to a team of Latham & Watkins attorneys for legal counsel on the deal. Latham’s team is led by Silicon Valley corporate partners Michael Hall and Josh Dubofsky, as well as by Orange County corporate partner Charles Ruck. Also advising from Latham: corporate partner David Lee, compensation and benefits partner James Metz, intellectual property partner J.D. Marple, tax partner Kirt Switzer and antitrust partners Michael Egge and Amanda Reeves. Partners John Manthei and Stuart Kurlander are advising on health care regulatory matters, while partners Joel Trotter and Wesley Holmes are advising on securities and finance matters. The Latham associates working on the matter are Una Au, Jason Cruise,Timothy Dawe, Aneta Ferguson, Darren Guttenberg, Jessica Munitz, John Raney, Elizabeth Richards, Brett Urig, Ashley Wagner and Michael Young. Richard Rew II serves as ArthroCare’s general counsel.

Latham previously represented ArthroCare in connection with a 2011 settlement agreement stemming from an accounting inquiry into the company’s insurance billing and health care compliance practices conducted by the U.S. Securities and Exchange Commission. That investigation ultimately led to the resignation of former CEO Michael Baker and several other top Arthrocare executives.