Smiths Group swallows Morpho Detection in £493m deal

Smiths Group announced a significant expansion on Thursday, agreeing to acquire California-based Morpho Detection for an enterprise value of $710m (£493m).

The FTSE 250 firm said the closing of the acquisition was still subject to customary conditions, including regulatory approvals, after which Morpho Detection will be merged with Smiths Group’s detection division.

Morpho manufactures and supplies detection systems and services to improve ‘mission-critical’ security at airports, borders and other high-risk infrastructure such as nuclear power plants, military installations and government buildings.

It also provides extensive services to maintain and upgrade its broad installed base of equipment and related products, Smiths Group said.

The board of Smiths Group planned to support the current product and service offerings of both businesses post-completion.

Morpho Detection had total revenues of $320m in 2015 with an operating margin of 18%. Aftermarket services, including software, represented more than half of total revenues.

"The threat environment for people and critical infrastructure around the world is constantly evolving and becoming more complex and sophisticated. The response, to keep people safe and the world running, demands cutting-edge technology and cost-efficient solutions,” said Smiths Group chief executive Andy Reynolds.

"Morpho Detection is a high quality business with a strong management team, and I am convinced that this combination provides a compelling competitive platform for product, service and technology leadership.

“The acquisition is consistent with our approach to increasingly focus investment in highly attractive technology-led areas, and will create significant value for shareholders and position us for long-term growth,” Reynolds concluded.