TA buys Smiths Medical from parent Smiths Group

Greg Gille
03 August 2021

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TA Associates has agreed to acquire the US-based Smiths Medical unit of Smiths Group, a listed UK-based engineering company, at a USD 2.3bn enterprise value.

Completion is expected by the end of the year. The deal includes a potential USD 0.2bn payment dependent on the unit's future performance. TA will structure the investment via the Trulli Bidco Limited newco.

Smiths said it expects to receive net cash proceeds on completion of USD 1.8bn (equivalent to GBP 1.3bn), which will be used to support investments in growth and enable a return of capital to shareholders. The group will also secure a 30% stake in Smiths Medical's holding company.

In late 2018, Smiths announced its intention to pursue the separation of Smiths Medical in order to create two distinct companies with independent strategies. The company's board believed the separation of Smiths Medical would enable Smiths to concentrate on growing as an industrial technology group and enable Smiths Medical to focus on realising its full potential in the medical device market.

In early 2019, Smiths initiated a dual-track process whereby it would pursue a demerger of Smiths Medical, while in parallel continuing to evaluate opportunities via a sale process for Smiths Medical in parallel with demerger preparations. In March 2020, the company shelved the separation process until global conditions improved following the Covid-19 outbreak.

The process was revived in March this year, with Smiths receiving a number of offers, it said in a statement. According to various Mergermarket reports, PE firms that have been linked to the process since 2019 include Blackstone, Bain, BC Partners and Cinven.

Smiths Group CEO Paul Keel said it despite its "strong brands and technology", Smiths Medical had not delivered "consistently strong financial performance relative to its medtech peers", adding that Smiths would work with TA to help unlock the potential of the business.

TA said that Smiths Medical would be well positioned to grow both organically and through acquisitions.

Smiths Medical is a global medical device business specialising in infusion systems, vascular access and vital care. In the financial year ending in July 2020, Smiths Medical generated revenues of GBP 918m and headline EBITDA of GBP 184m.