Frank Prenesti Sharecast News
31 Jan, 2025 08:08 31 Jan, 2025 11:28

Smiths Group surges on breakup plan after activist pressure

smiths group, detection, air, security, xray, airline, airport

Shares in Smiths Group surged on Friday after the engineering business said it was selling its electronic connectors unit and would demerge or offload the detection operation as part of a strategic review that includes extending its share buyback to £500m.

The breakup of the group is part of a plan "unlock significant value and enhance returns to shareholders" after US activist investor Engine Capital earlier this month said Smiths should explore a split. Shares in the firm were up 16% at one point in London trade.

Smiths said it would focus on "high performance industrial technologies for efficient flow and heat management," through its John Crane and Flex-Tek businesses, which served "attractive energy and industrial end markets and are set to deliver continued growth and margin expansion”.

Chief executive Roland Carter said the board had spent "considerable time" evaluating options to maximise shareholder value and address the "persistent discount to the significant value embedded within the group".

Smiths detection, the group's second-largest division, and which makes baggage-screeners for airports, will be spun off or sold after the disposal of the interconnect business.

The share buyback programme was also lifted by £350m with the cash expected to be returned to shareholders by December.

Smiths added that the recent cyber attack was limited to internal enterprise systems, and it had “made good progress in the recovery of these, with most critical systems being back online”.

“As a result of the immediate, proactive measures that we took, we have been able to minimise the impact on our operations,” it said.

“In terms of financial impact, our guidance for the full year is unchanged noting that, given the proximity of the incident to our half year close, we anticipate a portion of the revenue from the last week of January will shift into the second half of the financial year.”

Reporting by Frank Prenesti for Sharecast.com

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