UK engineering firm Smiths Group has agreed to sell its medical division to US private equity firm TA Associates for $ 2.3 billion (£ 1.7 billion), the latest in a series of UK acquisitions by foreign buyers.
Smiths Medical manufactures ventilators, syringe pumps and tracheostomy tubes for hospitals around the world, and its sale effectively breaks the FTSE 100-listed engineering conglomerate.
Smiths, who helped produce ventilators for the UK government at the start of the coronavirus pandemic, said the deal would help him focus on his core business of industrial technology. He has been trying to separate himself from his medical branch for several years, whether through a sale or a split, but those efforts have been delayed by Covid-19.
Smiths Group said the proposed transaction was “superior to all other proposals received during the separation process” and was seen as a better outcome for shareholders than a spin-off.
The $ 2.3 billion valuation includes debt, with an additional $ 200 million depending on the future performance of the Minnesota-based company.
Smiths Group is expected to receive net cash proceeds of $ 1.8 billion, plus a 30% stake in the medical unit’s new holding company and expects a “significant return of capital to shareholders” once the transaction closes.
The sale of Smiths Medical was announced on the same day that another UK engineering firm, Meggitt, agreed to be taken over by US rival Parker Hannifin in a £ 6.3bn deal. .
Smiths Group operations also manufacture components for the aerospace industry, as well as explosives detection devices and baggage screening kits used at airports.
“This transaction positions Smiths as a more focused industrial technology company with exciting growth opportunities, a common operating model and a shared goal,” said Paul Keel, its managing director.
“In keeping with our separation commitment, the sale generates immediate value for Smiths shareholders and positions us well for additional value creation through our retained 30% stake in Smiths Medical as well as potential additional consideration of 0 , $ 2 billion, depending on future performance. ”
There has been a flurry of private equity offers for UK companies over the past year, including the planned Morrisons takeover and the acquisition of rival supermarket chain Asda, as well as company d infrastructure John Laing and real estate developer St Modwen.