Smiths invites bids for £1bn sealing business
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Your support makes all the difference.Smiths Group, the aerospace conglomerate, is soliciting venture capital bids for its £1bn sealings business.
The company's bankers are throwing the net wider amid fears it will struggle to find a trade buyer for the divisions, which include the John Crane mechanical seals business.
The divisions, employing more than 16,000 people in around 50 countries, have sales this year of an estimated £950m and analysts believe they could fetch about £1bn.
Smiths, formed from the merger between Smiths Industries and TI Group in 2000, has never formally admitted the sealings business is being actively marketed. But it has made no secret of its plans to concentrate on its aerospace and medical divisions. Keith Butler-Wheelhouse, the chief executive, has promised eventually to jettison a raft of other industrial businesses.
The sealings business comprises John Crane and Polymer Sealing Solutions, a plastic seals business. It made operating profits of £128m last year on sales of £1.2bn, but has been affected by a slowdown in demand in some of its markets, particularly in the US and for industrial products in Europe.
Analysts believe the two halves could be sold separately, but that trade buyers may struggle to raise the cash for acquisitions, given the effects of the economic slowdown. "Smiths have been very positive on the polymers side ... but they have been worryingly silent on John Crane," one analyst said
Mr Butler-Wheelhouse has insisted the group is in no hurry to sell off its non-core divisions, but observers said the approaches to private equity buyers could mean the company will be able to move fast to raise funds if a big aerospace acquisition presented itself.
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