Smiths to sell airport scanning business in £2bn deal

Smiths Group has agreed a £2 billion deal to sell its arm that makes airport security scanners in the latest move to offload parts of the business following investor pressure.

The engineering conglomerate said the proposed sale of its Smiths Detection division to private equity firm CVC Capital Partners is expected to complete in the second half of next year.

The £2 billion price tag includes debts and is set to see Smiths receive cash proceeds of £1.85 billion, it said.

It follows the £1.3 billion sale of Smiths Interconnect business to US electronic components maker Molex Electronic, which was agreed in October.

Smiths has come under pressure to sell off parts of its business by US investment group and shareholder Engine Capital, which claimed the blue-chip firm’s share price could be worth about 60% more if it sold off parts of the business.

Under the break-up plans, Smiths will instead focus on its John Crane subsidiary, which makes seals and parts for heavy industries, and its Flex-Tek business, which makes heating elements.

Roland Carter, chief executive of Smiths, said the latest sale marks another “significant milestone” in the firm’s strategy.

He said: “We are focusing Smiths as a premium industrial engineering company specialising in flow management and thermal solutions, and today’s announcement positions us strongly to deliver enhanced growth and returns.

“We thank our Smiths Detection colleagues for their significant contribution to Smiths and their help in reaching this milestone.”

Smiths plans to boost returns for shareholders following the sales, it confirmed.

It is already carrying out a £1 billion share buyback, announced last month.

Smiths is among the UK’s biggest industrial firms, with four companies stretching across continents and industries and a history dating back more than 170 years.

It makes parts for the energy, aviation, aerospace, construction, automotive and semiconductor sectors among others, employing around 16,000 people across more than 50 countries.