Smiths Medical to float on stock market for more than £2 billion

Smiths Group has revealed it will float its medical business on the stock market as part of plans to split the division off from the rest of the company.

The move follows an announcement in November in which the FTSE 100 firm said it would spin off its medical arm to allow the remaining business to grow as an industrial technology group.

According to further details released on Friday, the whole process is expected to complete in the first half of 2020, with work under way to recruit a Smiths Medical chief executive.

At the same time, the group announced results for its first half which showed rising revenue but lower profits. Sales were up 2% to £1.57 billion, with better than expected organic growth. Pre-tax profits fell 13% to £174 million.

Smiths’ products include catheters, tracheotomy tubes, medicine infusion devices and patient monitoring software and hardware.

Chief executive Andy Reynolds Smith said: “Smiths delivered another good performance in the first half with sustainable growth driven by John Crane, Flex-Tek and Smiths Interconnect. The strong results from these divisions were partly offset by the anticipated decline in Smiths Medical and the timing of deliveries in Smiths Detection, with both on track to deliver growth in the second half.

“Today we have announced our plans for the separation of Smiths Medical to create two stronger companies each focusing on accelerating the execution of their plans and maximising the opportunities in their respective markets.”

The company had previously tried to sell its medical unit, having recently ended talks with US-based ICU Medical. It also attempted to sell the unit in 2013 to CareFusion.

Analysts at Liberum said the continuing under-performance of the unit could hamper its valuation.

Analyst Ryan Gregory said: “We have previously valued Smiths Medical at £2.8 billion, which is around the price Smiths is believed to have rejected from ICU last year; given the continued weak performance in Medical we believe that Smiths will now struggle to achieve such a valuation, let alone exceed it through a demerger.”

Analysts at Jefferies said the medical division was more likely to succeed alone.

They said: “If criticism can be constructive, if more pointed and informed questioning can keep Medical on its toes, and unable to hide, so to speak, within a larger Group, Medical is more likely to thrive, in our view.”


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