Smiths Group PLC’s surprise break-up has left questions around a potential US listing for the engineering firm, according to analysts.
Friday saw Smiths firm up plans to split off its Interconnect and Detection businesses following pressure from activist investor Engine Capital.
Engine had also previously called for its main unit, John Crane, to be listed in New York, with this set to become one of two of Smiths’ remaining businesses, beside Flex-Tek.
Reiterating a sum-of-the-parts valuation of 2,200p for Smiths, Citi analysts flagged the remaining scope for a US listing as among questions left following news of the break-up.
“Further upside could come from new mid-term targets, which we may get in March, and any further re-rating from an ultimate US listing,” analysts said.
“While management appears not to favour this, and we don't think it would be practical in any case until after the Detection de-merger, we don't think this question will go away.”
RBC analysts added plans for a break-up were clearly “very early in the actual process,” citing questions over Smiths’ possible future balance sheet structure.
Some six to nine months would likely pass before further news, RBC said, setting a 2,100p target as “uncertainty around potential valuations” remained.
Shares were down 1.7% at 2,030p on Monday.