British engineering company Smiths Group abandons sale of medical division
03 August 2013
British engineering company Smiths Group yesterday said that it had terminated talks to sell its medical division after it failed to agree terms with an unnamed suitor, which several media reports had earlier named US healthcare group CareFusion as the potential buyer.
The announcement sent the stock price of CareFusion tumbling by nearly 10 per cent to $35.06, valuing the California-based company at $7.8 billion.
Responding to a late May Financial Times report, London-based Smith had said that Smiths said that it had been approached for its medical-equipment division, which makes critical-care and surgical products for hospitals.
The paper had reported that Smith was weighing a plan to sell its medical division for more than £2 billion.
Smiths yesterday said that it was not possible to reach agreement with the potential suitor ''on acceptable terms for a transaction. Discussions have therefore been terminated.''
''In reaching this conclusion, the board has taken full account of the quality and highly cash generative nature of Smiths Medical, both standalone and in the context of the Group as a whole,'' the statement added.
Smiths Medical is a leading supplier of specialist medical devices, consumables and equipment for global markets.
It makes devices to help treat cancer, vital care products to reduce hospital-acquired infections, manage patients' airways before, during, and after surgery, maintain body temperature and assist reproduction through IVF therapy and safety products for health workers that prevent them from needlestick injuries and reduce cross-infections.
Around three-quarters of its end customers are hospitals, with the remainder comprising the alternate care market such as homecare, clinics and other surgery centres.
It has operations in over 30 countries with manufacturing plants in Mexico, the US, the UK, Italy, Germany and China.
It sells its products to around 120 markets and generated revenue of £864 million last year, with the US being its single largest market bringing in around 50 per cent of sales.
It has a direct sales presence in 22 countries, distribution arrangements in some 100 others, and generated revenue of £864 million last year.