SMITHS Group rejected a £2.45bn cash offer for the medical arm of its business, Smiths Medical, late last year, the company has revealed.
The bid, which was from private equity group Apax (although Smiths did not itself confirm the bidder), was a “best and final” rejected as not in the best interests of shareholders.
Smiths Medical accounts for 31 per cent of the Group’s revenues, bringing in £858m in the year to July 2010, but the offer gave the division a valuation equal to nearly half the Group’s market cap of £5bn.
But the company said that the offer did not take into account “the quality and highly cash generative nature of Smiths Medical”.
The Group’s chief executive, Philip Bowman, has in the past sold two of the businesses he has led. While CEO of food retailer Allied Domecq in 2005, he recommended its sale to Pernod Ricard.
He then moved to head up Scottish Power from 2006 to 2007 and presided over its sale to Spanish power company Iberdrola.
Over the past year, he has overseen a period of cost-cutting at Smiths Medical that has grown margins 180 basis points to 21.5 per cent, according to the Group’s most recent results.
Smiths Group itself is a conglomerate with divisions in security technologies, electronic transmission systems, fluid transmissions and mechanical seals aside from its medical tech arm.
Smiths declined to comment further; Apax declined to comment.