Smiths buys US firm

SMITHS Industries, the aerospace and specialist engineering company, has embarked upon a big acquisition programme with the purchase yesterday of Intertech Resources, a US medical equipment maker.

Smiths has paid dollars 110m (pounds 65m) for Intertech, a private company. The price comprises dollars 92m in cash and the assumption of dollars 18m of debt. Intertech makes disposable breathing equipment for anaesthetic uses and respiratory apparatus.

When Smiths published its half-year results in April, Roger Hurn, the chairman, said the group was ready for a 'major challenge' in acquisitions.

Yesterday Christopher Turner, finance director, said: 'Intertech is not the major challenge. It is the first in a series of acquisitions.'

He said Smiths had a cash pile of pounds 200m in the UK, generated from profits and some asset sales, to fund the expansion programme. Yesterday's purchase is being funded by borrowings in America. Mr Turner said he wanted to match dollar assets with dollar liabilities.

He said there were several 'very attractive' opportunities in the offing, and that a number of sets of negotiations were in progress.

Smiths is looking to reduce its exposure to civil and military aerospace by beefing up its medical and specialist engineering capabilities. In the six months to 1 February, aerospace contributed 50 per cent of the profits, medical 30 per cent and specialist engineering 20 per cent.

Mr Turner said that Smiths was not considering a bid for its troubled rival, British Aerospace, because the burdens on management capacity would be too great. BAe yesterday reported a heavy loss.

In the year to 30 June, Intertech made an operating profit of dollars 8m. The acquisition is expected to increase profits from Smiths' medical division by about 20 per cent.

Most of Intertech's sales are in North America, but Smiths said it would try to increase exports. Its headquarters are in Chicago and its production facilities in Florida. It employs 450 people.

The deal has yet to receive US anti-trust approval to clear the merger on competitive grounds.

Smiths shares fell yesterday as doubts about BAe dominated the sector. The shares closed at 308p, down 5p.