LONDON: British engineering company Smiths Group Plc (SMIN.L) said on Wednesday it has agreed to sell its Smiths Detection business to funds advised by private equity firm CVC Capital Partners for an enterprise value of 2.0 billion pounds ($2.55 billion).
The proposed deal marks the second major divestment by Smiths as it executes a strategy, outlined in January, to transform into a focused industrial engineering firm. The sale of Smiths Detection follows October’s agreement to sell its Smiths Interconnect unit for 1.3 billion pounds.
“Today we have reached another significant milestone for Smiths,” said Chief Executive Roland Carter. “We are focusing Smiths as a premium industrial engineering company specialising in flow management and thermal solutions.”
The transaction values Smiths Detection, which makes security and detection systems for airports, borders and critical infrastructure, at 16.3 times its headline operating profit of 122 million pounds for the year ended July 31, 2025. Smiths expects to receive net cash proceeds of approximately 1.85 billion pounds, after adjustments and costs.
The company stated its intention to return “a large portion” of these proceeds to shareholders, with details on timing and mechanism to follow. Smiths also plans to maintain a strong balance sheet and its investment-grade credit rating while continuing a 1-billion-pound share buyback program announced last month.
Completion of the sale is anticipated in the second half of 2026, pending consultation with employee representatives in France and customary regulatory approvals.
With the two sales, Smiths is now executing both major portfolio actions announced in its January strategic update. The combined enterprise value of the deals is 3.3 billion pounds.
The move will streamline Smiths around its John Crane and Flex-Tek divisions, which specialise in mechanical seals and thermal solutions for the energy, industrial and construction sectors. The company has set medium-term targets for the continuing business of 5-7% organic revenue growth and headline operating profit margins of 21-23%.
The board concluded that a sale to CVC offered a “more compelling outcome” than a previously considered demerger of the Detection unit, citing the immediate cash realisation for shareholders.
($1 = 0.7843 pounds)