- Detection and Interconnect for sale
- Focus on John Crane and Flex-Tek
- Buyback increased to £500 million
FTSE 100 engineering firm Smiths Group (SMIN) surprised the market in a good way this morning with the news it was planning ‘a number of strategic actions to unlock significant value and enhance returns to shareholders’.
The shares jumped as much as 323p or 17% to a new life-high of £21.88 before settling at £20.80 for a gain of 215p or 11.5% in mid-morning trade.
MORE STREAMLINED
Chief executive Roland Carter, who took over the role less than a year ago but is a Smiths ‘lifer’ having spent 30 years at the firm, including leading Smiths Detection and the Asia Pacific business, said while the company was pleased with its financial and operating performance in recent years it wanted to address the ‘persistent discount to the significant value embedded within the group’.
To that end, Smiths Interconnect will be put up for sale, with a deal hopefully announced by the end of 2025, after which Smiths Detection will be separated either by demerger or sale.
That will leave the group focused on high-performance industrial technologies for efficient flow and heat management through John Crane and Flex-Tek, which both enjoy leading positions in their markets with ‘attractive growth trends’.
On top of the disposal proceeds, streamlining the group will also bring big cost savings, in anticipation of which the current £150 million share buyback programme which was due to end this March has been increased to £500 million and extended to December 2025.
Going forward, the firm said its capital allocation policy would deliver ‘enhanced returns to shareholders, together with disciplined investment for growth, while maintaining a strong balance sheet with an intended investment grade rating’.