8th Sep 2021 08:26
(Alliance News) - Smiths Group PLC on Wednesday said it has agreed to sell its Smiths Medical division to ICU Medical Inc, supplanting a previous agreement with TA Associates LLP.
Shares in Smiths Group were trading up 3.9% at 1,478.00 pence each in London on Wednesday morning, making it the top performer in the FTSE 100 in early trade.
The FTSE 100-listed engineering firm said it has accepted a USD2.7 billion deal to sell its Smiths Medical unit to California-based medical technology firm ICU Medical.
According to Smiths, the terms of ICU Medical's deal are "superior" to a USD2.3 billion sale it agreed with private equity firm TA Associates in August.
Smiths Group has now withdrawn its recommendation for the TA Associates offer.
The ICU Medical deal values Smiths Medical at USD2.7 billion, the company said, with a further USD100 million up for grabs depending on Nasdaq-listed ICU Medical's share price performance following the acquisition.
Minus debt and other liabilities, the deal is worth USD2.4 billion, about USD400 million higher than the former TA Associates agreement.
Smiths noted that it will also receive 2.5 million ICU Medical shares, worth USD500 million at current market prices.
Upon completion, Smiths expects to receive USD1.85 billion in initial net cash proceeds from ICU Medical transaction, equivalent to around GBP1.34 billion. This is about USD50 million more than under the TA Associates deal, the company added.
Completion is expected in the first half of 2022, the company said, pending the approval of Smiths' shareholders and regulatory approvals.
Following the sale, the company said it plans to return 55% of the proceeds, equal to GBP737 million, to shareholders through a share buyback.
Chief executive of Smiths Group, Paul Keel, said: "The ICU Transaction provides both a higher value for Smiths' shareholders, as well as future value creation through our 10% holding of the enlarged combined group and a potential [USD100 million] additional contingent consideration. We are focused on concluding this superior transaction and on driving Smiths Group forward, delivering on our significant potential as a leading industrial technology group united by shared purpose, business characteristics and a common operating model."
The company said the sale of its medical unit "simplifies and positions Smiths for focused growth in its core industrial technology business" in future.
By Scarlett Butler; [email protected]
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