Smiths to bid for BOC disposal

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The Independent Online
Smiths Industries, the UK engineer, is planning a bid for BOC's US inhaled gases and plastics business, Ohmeda, in a deal which could be worth as much as pounds 1bn. Alan Thomson, finance director of Smiths, said yesterday that the group would be prepared to issue paper to fund the acquisition.

Ohmeda, which was only put on the market yesterday by BOC, the industrial gases giant, last year had sales in excess of pounds 500m. Analysts believe the business could fetch as much as pounds 1bn, which BOC plans to spend on acquisitions in Europe.

Mr Thomson said that Smiths was particularly interested in Ohmeda's disposable plastics business, roughly half the company, but would be prepared to buy the whole group and dispose of unwanted parts like anaesthetic gases and pharmaceuticals.

"Yes, we are definitely interested. This would double our size in disposable plastics and increase our presence in the US market." He added that the group would consider a rights issue to fund the deal. "We are always being told we should gear up or issue paper. The market thinks we could afford pounds 500m."

Mr Thomson said BOC's advisers, JP Morgan, had written to the company yesterday offering the business. Others believed to have been contacted include Abbott Laboratories, the US's second-largest player in anaesthetic gases, Zeneca and Mallinckrodt, the US chemicals group. Baxter and Astra are also possibilities. Abbott, which would not comment yesterday, would certainly face anti-trust issues in the US if it bid.

BOC, the world's second- largest industrial gases group, is likely to use proceeds of a sale on a big acquisition to strengthen its weak position in the continental European gas market.

Danny Rosenkranz, BOC's chief executive, said BOC planned to invest in organic growth, but did not rule out acquisitions: "We don't have any plans to buy anyone just yet, but we are a major player and we intend to stay one." However, sources close to the company say BOC's shopping list includes Messerheim-Griesheim, a private German group and the second- largest industrial gases group in Europe, and Sweden's AGA, Europe's number four which is capitalised at pounds 2bn.

Analysts agreed that Messer, which posted sales of DM2.47bn (pounds 823m) and DM330m profits in the year to January, is thought to be more open to a sale since the death, in May, of Dr Hans Messer, whose father founded the company. The group's principal shareholder, Hoechst, is keen to shed Messer to focus on life sciences. And though the group is planning a flotation in Germany, tax problems may make the move unattractive.

Though BOC might find itself bidding against gas groups like Linde and Air Liquide it could prove the keenest buyer. According to one analyst: "BOC will have cash and with no real interests in Europe it won't have a monopoly problem."