US acquisition costs Smiths dollars 32m

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SMITHS Industries hit the acquisition trail again with the dollars 32m ( pounds 21.6m) cash purchase of Tutco, a US manufacturer of electrical heating elements. The deal substantially expands the North American business of Smiths' industrial division.

Tutco, bought from privately owned Adams Industries, had sales of dollars 33m in the year to October 1993. Its profits exceeded 10 per cent of sales both last year and on average over the past five years. Tutco elements are used in heaters and air conditioners. The company supplies big appliance manufacturers such as GE and Electrolux in North America.

Recent acquisitions have taken Smiths into the heating and ventilation markets - notably its pounds 58m takeover of Vent-Axia in 1992. Roger Hurn, chairman, said: 'Tutco fits in well with these existing businesses, and with its strong market position and proven engineering skills, it shares many of their characteristics.'

The group has diversified beyond aerospace into medical and industrial businesses. In the year to July 1993, it spent pounds 124m on acquisitions. Smiths last bought an aerospace business four years ago, but it has not ruled out such acquisitions.

Andy Chambers, an analyst at Nomura, said: 'Tutco is a typical Smiths Industries acquisition, funded out of cash flow and with a modest amount of industrial logic to it.'

In July, the end of its financial year, Smiths had net cash of pounds 34m.

The shares closed 9 1/2 p lower at 465 1/2 p, with profit-taking ahead of the publication of Smiths' interim results next Wednesday.