By Ian Walker
Smiths Group is planning to spin off or sell its detection business and return up to 850 million pounds ($1.06 billion) to shareholders.
The FTSE-100 listed engineering group said Friday that it will also sell Smiths Interconnect by the end of this year as part of a plan to focus on the John Crane and Flex-Tek businesses.
Smiths increased its share buyback program to 500 million pounds, from 150 million pounds and said it will also return an extra 350 million pounds to shareholders by the end of the year. The company has already bought back 85 million pounds of shares under the original program and expects to complete the rest by the end of March.
The company said that it expects to return most of the money raised from the disposals via the share buybacks, adding that it expects to provide further information on its strategic focus alongside its half-year earnings in March.
"We are excited by the future potential of a more focused Smiths Group and will continue to invest in the business organically as well as to pursue value creating bolt-on acquisitions," the company said.
On Jan. 17 Engine Capital, which owns 2% of Smiths Group, called on the company 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 that the board should also consider spinning off John Crane in the U.S., and sell the other businesses as part of the review.
Engine Capital didn't immediately respond when approached for comment.
"Focusing on our world-class John Crane and Flex-Tek businesses and carefully managing the separation of Smiths Interconnect and Smiths Detection, we will deliver significant value for all stakeholders," Chief Executive Roland Carter said.
Smiths said that it continues to manage its response to the cybersecurity incident announced earlier this week, which was limited to its internal enterprise systems. It said that the company has made good progress recovering these, with the most critical systems back online, meaning that it has been able to minimize the impact on operations.
It added that given the timing of the incident the board expects some of the revenue generated toward the end of this month to be booked in the second half of the year.
On Jan. 14 the company said that it 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 closed Thursday at 18.65 pounds. They are currently up 8.5% over the year to date and 22% higher over the past three months.
Write to Ian Walker at ian.walker@wsj.com
(END) Dow Jones Newswires
January 31, 2025 03:00 ET (08:00 GMT)
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