LONDON (Reuters) - Artificial knee and hip maker Smith & Nephew (>> Smith & Nephew plc) said on Monday it had agreed to buy medical devices company ArthroCare Corp (>> ArthroCare Corporation) for $1.7 billion (£1 billion) in cash to strengthen its sports medicine business.

The British company said it would pay $48.25 a share in cash for ArthroCare, representing a 20 percent premium over the 90-day average price of the Austin, Texas-based company.

S&N Chief Executive Olivier Bohuon said it was a "compelling opportunity" to adds ArthroCare's products and technology to its sports medicine unit, one of the faster growing parts of the business.

Bohuon said the U.S. company's expertise in treating shoulder joints would complement S&N's strength in knee surgery.

Its radio-frequency technology for use in non-invasive surgery would also be combined with its S&N's mechanical blade portfolio to give surgeons more choice, he said.

Including the cash on ArthroCare's balance sheet, S&N said the acquisition would cost it a net $1.5 billion, financed from its debt facilities and cash balances.

(Reporting by Paul Sandle; editing by Kate Holton)

Stocks treated in this article : ArthroCare Corporation, Smith & Nephew plc