Smiths mulls $3B-plus medical biz sale

Smiths CEO Philip Bowman

U.K. technology giant Smiths Group is again mulling a multi-billion-dollar offer for subsidiary Smiths Medical, reportedly weighing offers from CareFusion ($CFN) and others.

As Financial Times reports, Smiths is yet to commit to a price or even settle on selling, but the paper's sources say early bids came in north of $3 billion, and Smiths' shares spiked as much as 7% on the news, trading at $21.19 midday Friday.

Back in 2011, Smiths rejected a $3.7 billion offer from private equity firm Apax Partners, but, as Financial Times notes, things have changed since then and the company now believes its medical business could stand alone.

In 2010, Smiths CEO Philip Bowman told the Telegraph that it's "better to be a buyer than a seller" and that no breakup was on the horizon, no matter how lucrative. But the company wasn't so dogmatic in rejecting Apax's $3.7 billion bid, saying at the time that "it would not be in the interests of shareholders to pursue discussions on the basis of an indication at this price level."

So, if nearly $4 billion wasn't enough two years ago, when Smiths' share of the medical device market was smaller, it's fairly unlikely a $3 billion offer will pass board muster. Bank of America Merrill Lynch analyst Alex Toms told Bloomberg that Smiths should shoot for at least $4.7 billion in exchange for its medical business.

Smiths Medical pulled in about $1.3 billion in revenue last year, good for 28% of the conglomerate's $4.6 billion. The segment makes imaging devices, catheters, infusion pumps and other hospital-based technology.

- read the FT story (sub. req.)
- here's Bloomberg's take

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