Smiths Group has agreed to sell its medical division to TA Associates for $2.3bn as the UK conglomerate seeks to concentrate on industrial technology.
The FTSE 100 group expects to receive net cash proceeds of $1.8bn from the sale and to retain a 30 per cent stake in the division, which made £918m of sales last year. The sum could rise by $200m contingent on future performance.
The British group declared in 2018 its intention to separate Smiths Medical, which makes specialist medical equipment and single-use devices, to become more focused on industrial technology but it eventually decided to sell the business instead of demerging it.
The deal is the latest sale of a UK-listed business to US private equity investors, which have benefited from the low cost of capital during the pandemic
Paul Keel, who joined Smiths Group as chief executive from 3M of the US in May, said: “This transaction positions Smiths as a more focused industrial technology company with compelling opportunities for growth, a common operating model and shared purpose.”
It plans to balance the use of the proceeds between investing in growth and shareholder returns.
Birker Bahnsen, managing director of TA Associates, said he sees many opportunities to invest in technology at Smiths Medical to reinforce “leading positions in its key franchises of infusion systems, vascular access and vital care”.
