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Smiths Group has announced plans to break up following pressure from activist investors, sending shares in the FTSE 100 conglomerate up more than 10 per cent on Friday.
Smiths, whose businesses span aerospace, communications, energy and security, said that it would sell or demerge two of its four core divisions and return “a large proportion” of the proceeds to shareholders.
Setting out its break-up plan, Smiths said it aimed to sell Smiths Interconnect, which makes electrical connectors, this year followed by a demerger or sale of Smiths Detection, a manufacturer of scanners used in airport security checks.
Chief executive Roland Carter said that Smiths would instead focus on its John Crane division, whose products include seals for the energy and chemicals industry, and Flex-Tek.
“The board has spent considerable time evaluating the options to maximise shareholder value and address the persistent discount to the significant value embedded within the group,” Carter said in a statement.
The shake-up at Smiths comes weeks after US activist investor Engine Capital called for an overhaul of the group, saying Smiths had “significant value that is currently unrealised due to its conglomerate structure”.
Shares in the group jumped 11 per cent in morning trading.
Carter’s predecessor as CEO, Paul Keel, had defended the group’s position as a conglomerate before leaving last year for a US company half its size.
Alongside the break-up plan, Smiths said it would expand a share buyback programme from £150mn to £500mn.