Smiths Group to sell aerospace unit, return 2.1 bln stg to shareholders UPDATE

Smiths Group to sell aerospace unit, return 2.1 bln stg to shareholders UPDATE

	Published : Mon, 15 Jan 2007 09:13 By : Agencies Print this Story

(adds detail from statements)

LONDON (AFX) - Smiths Group PLC said it plans to sell its aerospace division to General Electric Co of the US for 4.8 bln usd and to return 2.1 bln stg to shareholders.

Smiths said it had also agreed with General Electric to form a security equipment joint venture in which Smiths will hold a 64 pct stake and GE will own 36 pct.

Smiths said it was selling Smiths Aerospace due to the increased need for capital investment and a need in the industry for suppliers to have sufficient weight, particularly as the next generation of large aircraft development programmes kicks in.

It said the sale would provide value for shareholders and would allow the group to focus on its security equipment business, which it said has good growth prospects.

Smiths said it expects the group to generate improved returns on capital and better margins following completion of the sale, which is subject, among other things, to regulatory approval in the US and EU and approval by shareholders. It is due to complete during the second quarter of 2007.

Smiths' chief executive Keith Butler-Wheelhouse said it had invested heavily in aerospace technology in the last five years, which had won it positions on every major military and commercial programme.

'The structure of the aerospace industry is changing - in particular its increased capital requirements and the growing importance of supplier scale, especially as the next generation of large programmes kicks in,' he said.

'The board has considered these issues and the opportunities for Smiths going forward and last autumn instigated a thorough process which has led to today's announcement.

'By selling Aerospace, we crystallise the value for our shareholders. At the same time, we know this business is going to a great owner.

'Looking forward, Smiths continuing businesses serve markets with attractive growth prospects, enabling delivery of enhanced returns and strong cash conversion.'

Smiths said the detection joint venture with GE, entitled Smiths GE Detection, would combine Smiths Detection with GE Homeland Protection 'to create a leading global business serving the fast-growing detection and homeland protection markets.'

philip.waller@thomson.com

paw/jfr

The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.

AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited