Smiths Group (LSE:SMIN) shares opened almost 3% higher at 2,494p this morning after the engineering group agreed to sell its security screening division, Smiths Detection, to funds advised by CVC Capital Partners for £2 billion.
The deal values the business at 16.3 times its most recent annual operating profit of £122 million and 12.5 times EBITDA of £160 million for the year to the end of July 2025. After fees and other adjustments, Smiths expects to receive about £1.85 billion in cash.
The disposal is the second major step in the group’s plan to streamline its portfolio, following the agreed sale of its Interconnect arm in October. Together, the two transactions carry a combined enterprise value of £3.3 billion and mark what the company described as “strong execution” of the strategy laid out in January, which involves focusing the group on flow management and thermal technologies.
Roland Carter, chief executive, said the agreement was “another significant milestone”, adding: “We are focusing Smiths as a premium industrial engineering company specialising in flow management and thermal solutions, and today’s announcement positions us strongly to deliver enhanced growth and returns.”
Completion of the Detection sale is expected in the second half of 2026, after the usual regulatory checks and consultation with the French works council for Smiths Detection France.
Smiths said it intends to return a large portion of the proceeds to shareholders, while maintaining an investment-grade balance sheet and continuing with the £1 billion share buyback announced last month.
The group added that the immediate cash outcome of a sale offered better value than pursuing a demerger.
The company does not expect to allocate any of the proceeds to its defined benefit pension schemes.