Smiths sees US biochem firm as `perfect' market fit

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The Independent Online
SMITHS INDUSTRIES is negotiating to buy Biochem International (BCI), a quoted United States company making vital signs-monitoring equipment and hand-held pulse oximeters in America, the company said yesterday.

The price under discussion is around $83m (pounds 49.6m).

BCI's main shareholders, who control 75 per cent of the stock, are negotiating to merge BCI into Smiths Industries Medical Systems.

BCI made pre-tax profits of $7.3m on sales of $28m in the year to 30 June, and it has assets of $22m including $10m in cash. Based near Milwaukee, the American company employs 120 people, who will remain with the company as part of Smiths Industries.

The company specialises in pulse oximeters which measure pulse, pulse strength and oxygen levels in the blood. Smiths is a leading player in the respiratory care market, estimated to be worth $1.5bn a year in the US alone.

With the trend towards providing healthcare outside hospitals BCI's products will increase the range of Smiths products in the market, and the link - which is subject to regulatory approval - would also help BCI achieve further increases in its sales in overseas markets.

Keith Butler-Wheelhouse, chief executive of Smiths Industries, said yesterday: "BCI complements our medical systems activities perfectly, by strengthening our product portfolio and increasing our opportunities to supply small hospitals and clinics.

"We expect the deal to enhance profits in the first year, even after amortisation of goodwill," he added.

The deal comes at an important time for Smiths Industries. After nudging the 1,000p mark earlier this year the shares fell to a 30-month low of 640p recently, and they are now in grave danger of dropping out of the FTSE 100 Index at the next quarterly review of qualifying companies.

Relegation would have potentially serious consequences for the share price as institutions and fund managers committed to investing in the top 100 shares and tracker funds invariably dump the shares in favour of the newly elected companies.