By Brenda Goh and Zeba Siddiqui
LONDON Aug 2 British engineering company Smiths
Group said it had terminated discussions over a sale of
its medical division after it failed to agree terms with the
bidder, which a source previously named as U.S. healthcare group
Shares in CareFusion slumped as much as 10 percent and were
trading 8.8 percent down at $35.51 cents at 1617 GMT on Friday.
Smiths' shares were down 5.5 percent at 1,324 pence.
Smiths said on May 31 that it was in early stage talks about
selling the unit after a bid approach. The sources said at the
time the division could be worth more than 2 billion pounds ($3
"Smiths Group announces that it has not proved possible to
reach agreement with the potential counterparty on acceptable
terms for a transaction," the company said in a statement.
Smiths Medical, which contributed 35 percent of the
company's operating profit last year, supplies equipment to
hospitals and emergency services. Most of its products are
manufactured in the United States, Britain, Mexico and Italy.
B. Riley & Co analyst Gene Mannheimer said speculation over
the deal had caused a "frenzy of buying" in CareFusion stock,
which had risen by more than 10 percent in price since the end
"Simply put, now that the discussions have been withdrawn,
it's bad to CareFusion's fundamentals, which, quite frankly, are
not very strong at this point," he said. "A deal would have been
complementary to CareFusion's product line and certainly