Britain's Smiths Group to sell medical unit in $2.3 billion deal

(Reuters) -British engineering and technology company Smiths Group said on Monday it will sell its medical unit for $2.3 billion including debt to U.S. private equity firm TA Associates as it focuses on its core industrial technology business.

Smiths, whose businesses include making components for the aerospace industry as well as baggage screening kits and explosive detectors that are a common sight in airports, said the proposed deal offers an additional $200 million contingent on the future performance of Smith Medical, which makes respiratory devices and catheters.

The deal is the latest in a flurry of private equity interest in British companies often driven by relatively cheap valuations due in part to the pandemic and Brexit.

The sale, which is unanimously recommended by Smiths’ board, is expected to generate $1.8 billion in net cash proceeds, Smiths Group said, adding that it plans to give shareholders “significant” returns on the sale.

Smiths would also receive a 30% equity interest in Trulli Topco - the new holding company for the medical unit.

Smiths has been trying to separate its medical unit for years but in 2020 it had to halt the process as it focussed on making and delivering ventilators and critical-care devices during the coronavirus pandemic.

“The proposed transaction is superior to all other proposals received during the separation process and is considered a better outcome for shareholders than a demerger,” Smiths said in a statement.

Smiths Medical employs about 8,050 people in around 120 countries and generated 918 million pounds ($1.28 billion) in revenue in 2020.

The sale is expected to close by the end of this year, subject to shareholder and regulatory approvals, it added.

The Mail on Sunday had reported last month that TA Associates had made a 2 billion pound takeover approach for the unit.

($1 = 0.7197 pounds)

Reporting by Yadarisa Shabong in Bengaluru; Editing by Shinjini Ganguli and Susan Fenton