London listed Smiths Group is set to offload another of its businesses, as it works to streamline its operations after bowing to increasing investor pressure.
The FTSE 100 company has agreed to sell its Smiths Detection division to private equity firm CVC Capital Partners in a £2bn deal.
The business manufactures threat detection technology, including airport security scanners.
The transaction is expected to be completed in the second half of 2026, subject to regulatory approval, with the deal including debts and set to see Smiths receive cash net proceeds of approximately £1.85bn.
Smiths said it intends to return a “large portion” of cash processed from the sale to shareholders.
The group’s share price jumped 2.22 per cent in early morning trading to 2,484p on Wednesday. The stock has rocketed 43.5 per cent this year to date.
James Mahoney, partner at CVC, said: Smiths Detection’s strong market positions, anchored by its global leadership in aviation, create a compelling platform for long-term value creation.”
The sale marks yet another 2025 acquisition for CVC, who led the charge to acquire Hargreaves Lansdown in March in a landmark £5.4bn deal with Nordic Capital and Platinum Ivy.
Industrial engineering pivot
The transaction follows the sale of Smith’s Interconnect business to Molex Electronic Technologies for £1.3bn in October, which manufactures electronic components for markets ranging from aerospace to defence.
Both transactions are part of the group’s restructuring plans unveiled in January to reposition the business to a “premium industrial engineering company”, with chief executive Roland Carter hailing the latest sale as a “significant milestone”.
The company plans to do this by shifting focus to its John Crane subsidiary, which makes seals and parts for heavy industries and its Flex-Tek business which makes heating elements.
Dan Coatsworth, head of markets at AJ Bell noted the sale should “please shareholders” due to the favourable price and cash payout set to come their way.
He said: “Selling the Detection business will dramatically change the revenue split in the rest of the group.
“Detection accounted for 29 per cent of revenue in the past financial year, the second biggest contributor to the group.”
Investor pressure
The group has faced substantial pressure to offload parts of the business by US investment firm and shareholder Engine Capital, who hold a two per cent stake.
The firm sent a letter to the Board in January, stating Smiths could increase both its value and share price by selling off its “disparate businesses at higher multiples”, while also warning Carter against pursuing “meaningful acquisitions”.
The letter instead called for Smiths to focus on buying back shares, with the group initiating a new £1bn share buyback last month, which is expected to conclude in July 2026.