2nd Aug 2021 17:32
(Alliance News) - Smiths Group PLC late Monday said it has entered an agreement to sell its Smiths Medical unit to private equity firm TA Associates LLP, prompting the engineer to return cash to shareholders as a result of the sale.
The deal values Smiths Medical at an enterprise value of USD2.3 billion, equivalent to GBP1.7 billion, plus an additional USD200,000 contingent on future performance of Smiths Medical.
Smiths said the deal is superior to all other proposals received during the separation process and is considered a better outcome for shareholders than a demerger.
In addition, Smiths said it expects to receive net cash proceeds on completion of USD1.8 billion, which will be used to support investments in growth and enable a "significant return of capital to shareholders".
Chief Executive Officer Paul Keel said: "This transaction positions Smiths as a more focused industrial technology company with compelling opportunities for growth, a common operating model and shared purpose. 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 USD0.2 billion additional consideration, contingent on future performance.
"We look forward to working with TA as a strategic partner in unlocking the potential for this business. I would like to thank everyone at Smiths Medical for their tremendous contributions to the group and look forward to our continued collaboration."
The stock closed up 1.9% at 1,568.72 pence in London on Monday.
By Arvind Bhunjun; [email protected]
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