Smiths Group Kicks Off Sale of $3 Billion Medical Unit
(Bloomberg) -- Smiths Group Plc has kicked off a formal sale of its medical-equipment business in a deal that could value the unit at more than $3 billion, people familiar with the matter said.
The U.K. industrial conglomerate’s advisers have sent information memoranda to potential bidders, the people said, asking not to be identified as the details are private. Smiths Group expects to receive first-round bids before the end of the year, one of the people said.
The sale is attracting interest mostly from private equity firms, according to the people. No final decisions have been made, and the deliberations may not result in a deal, the people said. Shares in Smiths Group rose 2.9% in London morning trading, valuing the company at 6.6 billion pounds ($8.5 billion).
RBC Capital Markets wrote in a research note Tuesday that the unit is worth about 2.2 billion pounds based on a sum of the parts valuation. It could be valued at about 14 times earnings before interest, taxes, depreciation and amortization, similar to Siemens Healthineers AG, according to the note.
“We see the Smiths Medical valuation as limited by the fact that it has not grown sales or profits organically in the last decade,” RBC analyst Mark Fielding wrote in the note. “It would not be surprising in our view if the company were also to consider a possible sale simultaneously to a de-merger process.”
Smiths Group has been planning to separate the medical business since talks to combine it with U.S. rival ICU Medical Inc. collapsed last year. Blackstone Group Inc. and Cinven are among buyout firms that have been weighing bids for the unit, Bloomberg News reported earlier.
A representative for Smiths Group declined to comment.
Buyout firms, sitting on billions of dollars of capital, have been keen to purchase assets being spun out of listed companies. The medical unit makes devices such as patient monitors and drug-delivery systems that are used in ambulances, hospitals and care homes.
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