The UK engineering firm Smiths Group has agreed to sell its medical division to the US private equity firm TA Associates in a $2.3bn (£1.7bn) deal, in the latest of a string of UK acquisitions by overseas buyers.
Smiths Medical makes ventilators, syringe pumps and tracheostomy tubes for hospitals worldwide, and its sale effectively breaks up the FTSE 100-listed engineering conglomerate.
Smiths, which helped to produce ventilators for the UK government early in the coronavirus pandemic, said the deal would help it focus on its core industrial technology business. It has been trying to spin off its medical arm for several years, either through a sale or demerger, but these efforts had been delayed by Covid-19.
Smiths Group said the proposed transaction was “superior to all other proposals received during the separation process” and that it was considered a better outcome for shareholders than a demerger.
The $2.3bn valuation includes debt, plus there is another $200m contingent on the future performance of the business, which is based in Minnesota.
Smiths Group is expected to receive net cash proceeds of $1.8bn, plus a 30% stake in the new holding company for the medical unit and is planning a “significant return of capital to shareholders” once the deal is completed.
The sale of Smiths Medical was announced on the same day another UK engineering firm, Meggitt, agreed to be acquired by US rival Parker Hannifin in a £6.3bn deal.
Smiths Group’s businesses also manufacturer components for the aerospace industry, as well as explosive detector devices and baggage screening kits used at airports.
“This transaction positions Smiths as a more focused industrial technology company with compelling opportunities for growth, a common operating model and shared purpose,” said Paul Keel, its chief executive.
“Delivering on our commitment to separate, the sale captures immediate value for Smiths’ shareholders and positions us well for further value creation through our retained 30% ownership in Smiths Medical as well as potentially $0.2bn additional consideration, contingent on future performance.”
There have been a surge of private equity-backed bids for UK companies in the past year, including the proposed takeover of Morrisons and the acquisition of the rival supermarket chain Asda, as well as the infrastructure firm John Laing and the property developer St Modwen.