Smiths poised for $1bn US healthcare takeover

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The Independent Online

Smiths Group, the aerospace, detection and medical systems supplier, is poised to strengthen its US presence with the $1bn purchase of an Ohio-based healthcare business.

Smiths Group, the aerospace, detection and medical systems supplier, is poised to strengthen its US presence with the $1bn purchase of an Ohio-based healthcare business.

The acquisition of Medex, a leading supplier of medical devices such as syringe pumps and catheters, is expected to be announced this week, possibly as early as today.

It would be Smiths' sixth acquisition this year and the biggest since the group acquired the rival UK engineer TI four years ago.

Up to the end of September, Smiths had spent £215m on a series of "bolt-on" acquisitions. The list includes another US medical equipment firm, DHD Healthcare, and Integrated Aerospace, a Californian manufacturer of landing gear for military aircraft.

Medex is majority-owned by One Equity Partners, the private equity arm of JP Morgan Chase, and is one of the world's biggest medical equipment suppliers. In the nine months to the end of September it reported net sales of $245m.

Smiths had made no secret of its desire to expand through acquisition in its four main markets and has a war chest of about £1.4bn available to finance deals.

North America already accounts for just over half the group's £2.7bn in annual sales and more than 60 per cent of profits, and this latest deal will further underline the growing importance of the US market.

It is also an opportune takeover, allowing Smiths to take advantage of the weak dollar, which is close to a 12-year low of $2 to the pound.

Medical systems account for about £250m of Smiths sales - 18 per cent of group total. Medex has about $300m of annual turnover and in the first nine months of the year, it recorded a $55m profit on net sales of $245m.

Medex specialises in equipment for administering intravenous fluids and invasive pressure monitoring. Its main markets are the US, Canada and Europe.

Smiths' biggest single division is aerospace, which represents 38 per cent of turnover. Smiths has leading roles in a number of big civil and military aircraft programmes such as the US Joint Strike Fighter and the Airbus A380 superjumbo.

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