Defence group buys US medical products firm

Aerospace and defence group Smiths is to snap up one of the world’s leading medical device companies in a $925m (£476m / €688.7m) deal, it confirmed today.

The acquisition of California-based Medex will significantly boost Smiths’ presence in the United States and make it a major force in the medical products sector.

Medex, which develops and manufactures items such as syringe pumps and catheters, is expected to increase profits at Smiths’ existing medical devices division by nearly half and sales by a third.

Two-thirds of its sales are of intravenous catheters, which help prevent needle injuries. The products are used mainly in respiratory departments, intensive care units and infection control departments.

Smiths will pay $625m (£322m / €465.4m) for the company and take on $300m (£155m / €223.4m) of debt. It marks Smiths’ biggest transformation since it merged with engineering group TI in 2000.

Smiths chief executive Keith Butler-Wheelhouse said: “This transaction is a significant step in the continuing evolution of Smiths, and moves us into the medical devices big league.”

Medex, which employs 2,000 staff worldwide including 1,100 in the US, is mainly owned by One Equity Partners, the private equity arm of US investment bank JP Morgan Chase.

Its products go to more than 5,500 hospitals and healthcare centres in more than 75 countries.

In the year to December 31, it is expected to record sales of $330m (£170m / €245.7m) and underlying operating profits of $75m (£39m / €55.8m).

London-based Smiths, whose largest market is in the United States, has spent £215m (€311m) on six small businesses since its interim results in March.

Smiths, which employs around 9,000 staff in the UK, posted broadly flat full-year profits in September, but said it expected to deliver increased growth and profits in 2005.

Pre-tax profits for the year to July 31 before goodwill and one-off items came in at £350m (€506m) against £349m (€504.8m) previously.

All the group’s four divisions – aerospace, detection, medical and speciality engineering – boosted their market positions during the year.

The deal, which is subject to regulatory approval, is expected to be completed early in 2005.