By Ian Walker
Engine Capital, which owns 2% of Smiths Group, is calling on the FTSE 100 listed engineering group to undertake a review of the business, including a possible sale of the company in whole or part.
The New York-based activist hedge fund said in a letter to Smiths on Friday that the board should also consider spinning off John Crane in the U.S., and sell the other businesses as part of the review.
Citing a sell-side analysis note, the investor says that Smiths shares could be worth around 2,596 pence. This would imply a market capitalization of 8.90 billion pounds ($10.89 billion) compared with its current value of around 6.38 billion pounds based on its current share price of around 1,860 pence.
Engine Capital adds that John Crane is the crown jewel of the company and would command a significant premium to the company's trading multiple if it were to be separately listed in the U.S.
It called on the company to discuss its ideas with other shareholders.
Responding, Smiths said that it welcomes all feedback from shareholders and continues to have a clear focus on creating value.
It referred back to the company's statement Tuesday that the board now expects fiscal 2025 organic revenue growth of between 6% and 8%, up from previous guidance of 5%-7%. It attributed the performance to the detection and interconnect units during the second quarter of the year, and improved visibility in the full-year order book.
Alongside the guidance increase the company said that Chief Financial Officer Clare Scherrer would retire at the end of the month and be replaced by Julian Fagge from Feb. 1
Shares were up 95.0 pence, or 5.4%, at 1,860 pence in early afternoon European trading. They are currently 13% higher over the past three months.
Write to Ian Walker at ian.walker@wsj.com
(END) Dow Jones Newswires
January 17, 2025 07:12 ET (12:12 GMT)
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