REG - Smiths Group PLC - SALE OF SMITHS DETECTION

SmithsAnnouncement

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RNS Number : 0458K  Smiths Group PLC  03 December 2025

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE

3 December 2025

SMITHS GROUP PLC
SALE OF SMITHS DETECTION

Smiths Group plc (Smiths) announces that it has entered into an agreement for
the proposed sale of Smiths Detection to funds advised by CVC Capital Partners
(CVC) (the Purchaser) (the Proposed Transaction). The Proposed Transaction
values Smiths Detection at an enterprise value of £2.0bn, representing 16.3x
headline operating profit of £122m and 12.5x headline EBITDA of £160m for
the financial year ending 31 July 2025. Based on customary adjustments, Smiths
expects to receive net cash proceeds of approximately £1.85bn.

The Proposed Transaction, in combination with the recently announced sale of
Smiths Interconnect, represents significant further progress on the strategic
actions announced in January 2025. This repositions Smiths as a focused,
high-performance, industrial engineering company, and delivers significant
value for all stakeholders.

Subject to completion of information and consultation processes (the
Consultation) with the works council of Smiths Detection France SAS (the Works
Council), and customary regulatory approvals, completion of the Proposed
Transaction (Completion) is expected in the second half of calendar year 2026.

Roland Carter, Chief Executive of Smiths, said: "Today we have reached another
significant milestone for Smiths, with the agreement to sell Smiths Detection
to CVC for an enterprise value of £2.0bn. This builds on our recently
announced sale of Smiths Interconnect and demonstrates strong execution
against the strategic actions we set out in January centred on value creation.

"We are focusing Smiths as a premium industrial engineering company
specialising in flow management and thermal solutions, and today's
announcement positions us strongly to deliver enhanced growth and returns.

"We thank our Smiths Detection colleagues for their significant contribution
to Smiths and their help in reaching this milestone."

Proposed Transaction highlights

·          Highly attractive valuation: the enterprise value of
£2.0bn represents a multiple of 16.3x headline operating profit of £122m and
12.5x headline EBITDA of £160m for the financial year ending 31 July 2025.

·          The Proposed Transaction, together with the sale of
Smiths Interconnect announced in October 2025, represents a combined
enterprise value of £3.3bn.

·          With the Proposed Transaction and the agreed sale of
Smiths Interconnect, Smiths is now in the process of executing both strategic
portfolio actions announced in January. Together, these transactions
demonstrate continued progress in delivering on actions designed to maximise
value creation, unlock portfolio value and enhance returns to shareholders.

·          Repositions Smiths as a high-performance industrial
engineering company focused on technologies in flow management and thermal
solutions with high customer-centricity, leading positions in attractive,
growing segments and a strong financial profile.

·          Smiths intends to return a large portion of the net cash
proceeds from the Proposed Transaction to shareholders and will provide an
update on timing and mechanism in due course.

·          Smiths intends to maintain a strong and efficient balance
sheet alongside a solid investment-grade credit rating, whilst executing the
£1bn buyback announced on 19 November 2025.

·          Completion is expected in the second half of calendar
year 2026, subject to the Consultation and customary regulatory approvals.

Proposed Transaction background and rationale

As announced on 31 January 2025, Smiths is committed to a strategy designed to
unlock significant value, enhance returns to shareholders and deliver above
market growth over the medium term.

A core element of this strategy is to focus Smiths as a high-performance
industrial engineering company. Smiths supports customers in attractive
energy, industrial and construction end markets underpinned by structural
megatrends, and is well positioned for continued growth and margin expansion.

To achieve this, Smiths announced plans to separate both Smiths Detection and
Smiths Interconnect in January 2025. The sale of Smiths Interconnect to Molex
Electronic Technologies Holdings, LLC was announced on 16 October 2025. With
the Proposed Transaction, Smiths is now in the process of executing both major
portfolio actions outlined in the January strategic update.

After a competitive sale process, the Smiths Board of Directors (the Smiths
Board) concluded that the terms of the Proposed Transaction represented a
compelling value proposition, and a more compelling outcome than the
alternative demerger which was also under consideration. In particular, the
Smiths Board believes that:

·          The Proposed Transaction value fully reflects the
long-term growth and margin expansion prospects of Smiths Detection.

·          The Proposed Transaction value compares strongly against
relevant publicly available benchmarks.

·          The immediate realisation of cash is a preferred outcome
for shareholders, as compared to the demerger proposal.

·          The net cash proceeds support further growth, as well as
further substantial capital returns to shareholders over the medium term and
provide an opportunity to invest in a more focused Smiths.

A new Smiths focused on efficient flow management and thermal solutions

The strategic actions taken position Smiths as a focused, stronger business
specialising in efficient flow management and thermal solutions. Smiths,
following Completion and completion of the sale of Smiths Interconnect (the
Continuing Smiths), will have a stronger financial profile and growth
potential, with the table below showing the historical financial performance
of the combined John Crane and Flex-Tek businesses:

                                            FY2022  FY2023  FY2024  FY2025
 Organic revenue growth
 John Crane                                 +3.7%   +15.2%  +9.8%   +3.0%
 Flex-Tek                                   +16.1%  +10.1%  (0.8%)  +4.4%
 Total organic revenue growth(1)            +8.3%   +13.0%  +5.4%   +3.6%

 Headline operating profit margin
 John Crane                                 20.9%   22.6%   23.2%   23.8%
 Flex-Tek                                   20.6%   19.4%   20.5%   19.5%
 Central costs(2)                           (2.7)%  (2.4)%  (2.6%)  (2.4%)
 Total headline operating profit margin(3)  18.0%   18.9%   19.5%   19.6%

 

Note: The financial information above relating to John Crane, Flex-Tek and
Central costs has been extracted without material adjustment from the
consolidation schedules and supporting accounting records that underlie the
audited consolidated financial statements of Smiths for the years ended 31
July 2022, 31 July 2023, 31 July 2024, and/or 31 July 2025 (as applicable).

 

(1) Total organic revenue growth calculated as the blended organic revenue
growth rate of John Crane and Flex-Tek.

(2) Central costs shown as a percentage of aggregate John Crane and Flex-Tek
revenue.

3 Total headline operating profit margin calculated as the aggregate headline
operating profit or cost of John Crane, Flex-Tek and Central costs as a
percentage of John Crane and Flex-Tek revenue

 

 

In March 2025, Smiths set out its new enhanced medium-term financial targets
that reflect this superior financial potential of Continuing Smiths following
Completion:

·          Growth focused: 5-7% organic revenue growth
through-cycle, with a

21-23% headline operating profit margin and headline EPS growth of more than
10%.

·          Cash generative: ~100% operating cash conversion, with a
ROCE above 20%.

·          Disciplined allocators of capital: Smiths will drive
growth and productivity through RD&E, operational excellence and
value-accretive acquisitions, underpinning a progressive dividend and enhanced
returns to shareholders.

The Acceleration Plan to deliver productivity and capability enhancements, and
a streamlined cost base, will help support the achievement of these targets.
Smiths remains on track to deliver £40-45m annualised benefits in FY2027 and
beyond, with approximately half expected in FY2026, for a total cost of
£60-65m. Around 2/3 relates to the retained businesses and targets central
costs remaining at

1.5-1.7% of revenue, following completion of the separation processes.

Use of proceeds

At Completion, Smiths is expected to receive approximately £1.85bn in net
cash proceeds (after accounting for related transaction expenses and
separation costs), subject to customary adjustments by virtue of the locked
box accounts mechanism in the SPA (as defined below).

It is intended that a large portion of the net cash proceeds from the Proposed
Transaction will be returned to shareholders and that any remaining net cash
proceeds will be used to invest in organic and inorganic growth for the
streamlined Smiths.

Smiths will provide an update on timing and mechanism in due course.

Smiths has engaged with the trustees of the Smiths Industries Pension Scheme
and the TI Group Pension Scheme (Smiths two defined benefit pension schemes)
(the Trustees) to discuss the use of net cash proceeds of the strategic
transactions. Smiths does not currently anticipate any requirement to allocate
any net cash proceeds of sale to either the Smiths Industries Pension Scheme
or the TI Group Pension Scheme.

 Impact on the assets and earnings

Based on the financials as reported at 31 July 2025, the financial impacts of
the Proposed Transaction are currently expected to be as follows:

 

·          Pro forma total headline operating profit for the fiscal
year ended 31 July 2025 would be £383m (representing a £122m adjustment).

·          Pro forma total assets would be £2,361m before
completion of the Smiths Interconnect sale (representing a £1,650m
adjustment). Pro forma total assets would be £1,854m after completion of the
Smiths Interconnect sale (representing a £2,157m adjustment).

·          Pro forma total liabilities would be £1,389m before
completion of the Smiths Interconnect sale (representing a £562m adjustment).
Pro forma total liabilities would be £1,283m after completion of the Smiths
Interconnect sale (representing a £668m adjustment).

Board opinion

The Smiths Board believes the terms of the Proposed Transaction are in the
best interests of Smiths shareholders as a whole.

UK Listing Rules

The Proposed Transaction, due to its size in relation to Smiths Group plc, is
a significant transaction for the purposes of the UK Listing Rules of the
Financial Conduct Authority (the UKLRs) and is therefore notifiable in
accordance with UKLR 7.3.1R and 7.3.2R.

Enquiries

 IR Contacts                           Media Contacts

 Siobhán Andrews, Smiths Group plc     Tom Steiner, Smiths Group plc

 +44 (0) 7920 230093                   +44 (0) 7787 415891

 siobhan.andrews@smiths.com            tom.steiner@smiths.com

 Ana Pita da Veiga, Smiths Group plc   Alex Le May, FTI Consulting

 +44 (0) 7386 689442                   +44 (0) 20 3727 1340

 ana.pitadaveiga@smiths.com            smiths@FTIConsulting.com

 Company Secretary

 Matthew Whyte

 +44 (0) 7775 982879

 Goldman Sachs International           Tel: +44 (0) 20 7774 1000

 (Joint Financial Adviser)

 Mark Sorrell / Charlie Lytle /

Nick Harper / Harry Webster

 J.P. Morgan Securities plc            Tel: +44 (0) 20 7742 4000

 (Joint Financial Adviser)

 Richard Perelman / Alex Bruce /

Charles Oakes / Mayank Chaturvedi

 

Freshfields LLP is acting as legal adviser to Smiths in connection with the
Proposed Transaction.

About Smiths

For over 170 years, Smiths has been pioneers of progress, engineering a better
future. Smiths strategy is to be a focused, efficient and value creating
industrial engineering company operating in the attractive and growing
segments of energy, industrials and construction.

Smiths focuses on solving the toughest problems for its customers, helping
address critical global needs such as decarbonisation and the ever-increasing
demand for process and energy efficiency. Listed on the London Stock Exchange,
Smiths employs c.16,000 colleagues in over 50 countries. For more information,
visit www.smiths.com.

 About Smiths Detection

Smiths Detection is a global leader in threat detection and security screening
technologies for aviation, ports and borders, urban security, and defence
segments. Its mission is to help make the world a safer place through advanced
detection solutions that safeguard people, infrastructure, and society. In
the financial year ended 31 July 2025, Smiths Detection generated revenue of
£963 million and headline operating profit of £122 million. As at 31 July
2025, Smiths Detection had total assets of £1,650 million.

About the Purchaser

CVC is a leading global private markets manager with a network of 30 office
locations throughout EMEA, the Americas, and Asia, with approximately €201bn
of assets under management. CVC has seven complementary strategies across
private equity, secondaries, credit and infrastructure, for which CVC funds
have secured commitments of approximately €240bn from some of the world's
leading pension funds and other institutional investors. Funds managed or
advised by CVC's private equity strategy are invested in approximately 150
companies worldwide, which have combined annual sales of over €165bn and
employ more than 600,000 people. In the UK, CVC has over the last 10 years
invested in best-in-class businesses including Formula One, Sky Bet, Domestic
& General, RAC, Moto, Pension Insurance Corporation, Ontic, M Group
Services, Neptune Energy and Hargreaves Lansdown, amongst others.

 Important notices

This announcement contains inside information for the purposes of article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 (MAR), and is disclosed
in accordance with the Smiths obligations under Article 17 of MAR.

The person responsible for arranging the release of this announcement on
behalf of Smiths is Matthew Whyte, Company Secretary

Legal Entity Identifier (LEI): 213800MJL6IPZS3ASA11

Forward-looking statements

Certain information contained in this announcement may constitute
"forward-looking statements," which can be identified by the use of terms such
as "may", "will", "should", "expect", "anticipate", "project", "estimate",
"intend", "continue," "target" or "believe" (or the negatives thereof) or
other variations thereon or comparable terminology. These forward-looking
statements include matters that are not historical facts and include
statements regarding Smiths intentions, beliefs or current expectations
concerning, among other things, Smiths results of operations, financial
condition, liquidity, prospects, growth and strategies. Due to various risks
and uncertainties, actual events or results or actual performance of Smiths
may differ materially from those reflected or contemplated in such
forward-looking statements. As a result, investors should not rely on such
forward-looking statements in making their investment decisions. No
representation or warranty is made as to the achievement or reasonableness of
and no reliance should be placed on such forward-looking statements. By their
nature, forward-looking statements involve risk and uncertainty because they
relate to future events and circumstances. A number of factors could cause
actual results and developments to differ materially from those expressed or
implied by the forward-looking statements. Save as required by applicable law
or the UKLR, Smiths expressly disclaims any intention, obligation or
undertaking to update, review or revise any   of   the   information
or   the   conclusions   contained   herein,   including
forward-looking   or   other   statements contained in this
announcement, or to correct any inaccuracies which may become apparent whether
as a result of new information, future developments or otherwise.

Cautionary notice

This announcement may not be distributed, directly or indirectly, in or into
or from any other jurisdiction where to do so would constitute a violation of
the relevant laws of such jurisdiction. This announcement does not constitute
or form part of an offer to sell or issue, or any solicitation of an offer to
buy or subscribe for, any securities referred to herein in any jurisdiction.
The distribution of this announcement and other information in connection with
the Proposed Transaction in certain jurisdictions may be restricted by law and
persons into whose possession any document or other information referred to
herein comes should inform themselves about and observe any such restriction.
Any failure to comply with these restrictions may constitute a violation of
the securities laws of any such jurisdiction.  No statement in this
announcement is intended to be a profit forecast.

Information in this announcement cannot be relied upon as a guide to future
performance.

Rounding

Certain figures included in this announcement have been rounded. Accordingly,
figures shown for the same category may vary slightly and figures shown as
totals may not be an arithmetic aggregation of the figures that precede them.

Enterprise value

Throughout the announcement, the enterprise value of Smiths Detection is
stated on a debt free, cash free basis and before taking into account any
adjustments required under the terms of the Proposed Transaction, tax, and
associated transaction costs.

 Important information relating to the joint advisers

Goldman Sachs International (Goldman Sachs), which is authorised in the United
Kingdom by the Prudential Regulation Authority (PRA) and regulated in the
United Kingdom by the Financial Conduct Authority (FCA) and the PRA, is acting
as joint financial adviser exclusively to Smiths and no one else in connection
with the matters described in this announcement and will not be responsible to
anyone other than Smiths for providing the protections afforded to clients of
Goldman Sachs nor for giving advice in connection with the matters set out in
this announcement or any transaction, arrangement or other matter referred to
in this announcement.

J.P. Morgan Securities plc, which conducts its UK investment banking business
as J.P. Morgan Cazenove (J.P. Morgan Cazenove), is authorised in the United
Kingdom by the PRA and regulated by the FCA and PRA. J.P. Morgan Cazenove is
acting as joint financial adviser exclusively to Smiths and no one else in
connection with the matters set out in this announcement and will not regard
any other person as its client in relation to the matters in this announcement
and will not be responsible to anyone other than Smiths for providing the
protections afforded to clients of J.P. Morgan Cazenove or its affiliates, nor
for providing advice in relation to any matter referred to herein.

Appendix 1

Summary of the principal terms of the Proposed Transaction

1.         Put Option

Under French employment laws, prior to making any decision to enter into the
Proposed Transaction (including by way of entry into any binding documentation
such as a sale and purchase agreement), Smiths is required to carry out and
complete the Consultation with the Works Council. It is intended that the
Consultation will begin following this announcement. Whilst Smiths will ensure
that the views of the Works Council are properly considered, the Works
Council's opinion on the Proposed Transaction is consultative and not binding
on Smiths or the Purchaser. Following completion of the Consultation, the
agreement that Smiths has entered into (the Put Option Deed) gives it a final
and irrevocable option to: (i) sell all of the shares in the Smiths Detection
Group Limited (the Target) to the Purchaser for the price, on the terms, and
subject to the conditions set out in the Put Option Deed and in the SPA (as
defined below); and (ii) to enter into the SPA (as defined below) with the
Purchaser (the Put Option).

2.         SPA

2.1     Parties and structure

The Proposed Transaction will be governed by the sale and purchase agreement
(the SPA), which will be entered into by, among others, Smiths Group
International Holdings Limited (the Seller) and the Purchaser within five
business days of the exercise of the Put Option (or such later date as may be
agreed in writing by the Purchaser and the Seller). Under the terms of the SPA
and subject to the Conditions (as defined below), the Seller will sell and the
Purchaser will purchase the entire issued share capital of the Target. Subject
to customary regulatory approvals, Completion is expected to occur in the
second half of calendar year 2026.

2.2     Conditions precedent to Completion

Completion of the Proposed Transaction is subject to obtaining customary
regulatory approvals from certain antitrust and other regulatory authorities
(the Conditions).

The longstop date for satisfaction of the Conditions is 4 December 2026 (the
Longstop Date). The Seller and the Purchaser can agree in writing to extend
the Longstop Date.

2.3     Consideration

The net cash proceeds for the Proposed Transaction are expected to be £1.85bn
(after accounting for related transaction expenses and separation costs),
based on an enterprise value of £2.0bn and subject to customary locked-box
adjustments including for leakage since 31 July 2025 (the Consideration). The
Consideration is payable on Completion of the Proposed Transaction.

2.4     Undertakings

The SPA includes customary covenants on the Seller from the date of the Put
Option Deed to Completion, including to use all reasonable endeavours to
ensure that the affairs of the Target group (the Target Group) are conducted
in the ordinary and usual course of the Target Group's business in all
material respects, subject to certain exceptions.

The Seller has also undertaken to use reasonable endeavours to implement the
separation of Smiths Detection from Smiths.

2.5     Restrictive covenants

The Seller and the Purchaser have each agreed to customary non-solicitation
obligations. The Seller has agreed to a non-compete obligation for a period of
12 months after Completion.

2.6     Warranties and Tax Covenant

The Seller has given customary fundamental warranties relating to its title to
the shares in the Target Group, as well as to its own capacity and authority.
The Seller has also given customary business and tax warranties and a tax
covenant in favour of the Purchaser, and the Seller's liability in respect of
these warranties and covenant is subject to a £1 cap. The Seller has given
the warranties as at the date of the Put Option.

Warranty and indemnity insurance is in place in respect of all the warranties
given by the Seller under the SPA.

2.7     Limitations on liability

Claims under the SPA are subject to customary financial and other limitations
of liability. The aggregate amount of the Seller's liability for all claims
under the SPA (other than claims for leakage) are subject to a cap equal to
the Consideration.

2.8     Termination

If the Conditions have not been satisfied or fulfilled by the Longstop Date
(or such later date as the Seller and the Purchaser may agree in writing),
each of the Seller and the Purchaser is entitled to terminate the SPA by
providing notice to the other party, subject, in the case of the Purchaser, to
the Purchaser having complied with its obligations in the SPA relating to
satisfaction of the Conditions.

In addition, if certain of the Completion obligations of the Seller or the
Purchaser are not complied with on the date of Closing, the SPA may be
terminated by the Purchaser (in the case of non-compliance by the Seller) or
the Seller (in the case of non-compliance by the Purchaser).

2.9     Governing law

The SPA is governed by English law.

3.         TSA

At Completion, Smiths Business Information Services Limited (BIS) and the
Target will enter into a transitional services agreement (the TSA) relating to
transitional services to be provided or procured by BIS to the Target for a
transitional period following Completion.

4.         LCEA

At Completion, Smiths and the Target will enter into a licence and
co-existence agreement (the LCEA) under which: (a) Smiths will grant the
Target a transitional licence to use certain trade marks for a transitional
period post-Completion; and (b) Continuing Smiths and Smiths Detection will
agree to co-exist in their respective uses of the "SMITHS" and "SMITHS
DETECTION" trade marks following the Transaction.

 

Appendix 2

Historical Financial information

The following historical financial information relating to Smiths Detection
has been extracted without material adjustment from the consolidation
schedules and supporting accounting records that underlie the audited
consolidated financial statements of Smiths for the years ended 31 July 2024
and/or 31 July 2025 (as applicable).

KPMG LLP was Smiths auditor in respect of each of the years ended 31 July 2024
and 31 July 2025. The consolidated statutory accounts of Smiths for the years
ended 31 July 2024 and 31 July 2025 have been delivered to the Registrar of
Companies. The auditor's reports for these periods were unqualified and did
not contain statements under section 498(2) or (3) of the Companies Act.

The following financial information does not constitute statutory accounts
within the meaning of section 434 of the Companies Act. The financial
information in this Appendix has been prepared using the IFRS accounting
policies used to prepare the consolidated financial statements of Smiths for
the years ended 31 July 2024 and/or 31 July 2025 (as applicable).

1.         FY2025 consolidated balance sheet of Smiths Detection

                                                               31 July 2025
                                                               £m
 Assets
 Intangible Assets and Goodwill                                755
 Property, plant and equipment                                 40
 Right of use assets                                           12
 Financial assets - other investments                          1
 Deferred tax assets                                           28
 Trade and other receivables                                   16
 Long Term Assets                                              852
 Inventories                                                   309
 Total Current tax receivable                                  4
 Trade and other receivables                                   297
 Cash and cash equivalents                                     186
 Financial derivatives                                         2
 Current Assets                                                798
 Total Assets                                                  1,650
 Liabilities
 Financial liabilities - borrowings                            (74)
 Financial liabilities - leases                                (8)
 Provisions for liabilities and charges                        (15)
 Trade and other payables                                      (331)
 Current tax payable                                           (24)
 Current Liabilities                                           (452)
 Financial liabilities - leases                                (8)
 Provisions for liabilities and charges                        (6)
 Retirement benefit obligations                                (37)
 Deferred tax liabilities                                      (34)
 Trade & other payables                                        (25)
 Long Term Liabilities                                         (110)
 Total liabilities                                             (562)
 Net assets                                                    1,088

 

2.         FY2025 and FY2024 consolidated income statements of Smiths
Detection

                                Year ended 31 July 2025               Year ended 31 July 2024
                                Headline  Non-headline  Total         Headline  Non-headline  Total
                                £m        £m            £m            £m        £m            £m
 Revenue                        963       -             963           859       -             859
 Operating costs                (841)     (26)          (867)         (757)     (19)          (776)
 Operating profit               122       (26)          96            102       (19)          83
 Finance costs                  (4)       (1)           (5)           (2)       (1)           (3)
 Profit/(loss) before taxation  118       (27)          91            100       (20)          80
 Taxation                       (38)      (5)           (43)          (27)      (2)           (29)
 Profit/(loss) for the year     80        (32)          48            73        (22)          51

 

 

Appendix 3

Additional Information

1.         Risks

The shareholders of Smiths should carefully consider, together with all other
information contained in this announcement, the specific factors and risks
described below. The risks disclosed below are those which the Smiths Board
considers are material risks related to the Proposed Transaction. The risks
described below are not set out in any order of priority, assumed or
otherwise. There may be other risks of which the Smiths Board is not aware (or
which it believes to be immaterial which may be connected to the Proposed
Transaction) and which have or may have a material and adverse effect on the
business, financial condition, results of operations or future prospects of
Continuing Smiths.

1.1     Risks relating to the Proposed Transaction

(a)      Proposed Transaction may not proceed to Completion

Completion is subject to certain conditions in the Put Option Deed and the SPA
including, among other things, the consent of relevant antitrust and other
regulatory authorities. There can be no assurance that the conditions will be
satisfied and, accordingly, that Completion will take place.

If Completion does not occur, the Seller will not receive the net cash
proceeds. Further, some other costs incurred by the Seller in connection with
the Proposed Transaction (such as legal, other advisory fees and
administrative costs) would be incurred without the receipt of those net cash
proceeds.

(b)      Exposure to liabilities and restrictions under Put Option and
the SPA

The Put Option and the SPA contain obligations in the form of warranties, a
tax covenant, certain pre-Completion undertakings and certain customary
post-Completion restrictive covenants in favour of the Purchaser. The Seller
has taken steps to minimise the risk of liability through customary
limitations on liability (including a £1 cap on the Seller's liability with
respect to the business and tax warranties and the tax covenant) and has
sought to ensure that the restrictive covenants will not impact Continuing
Smiths business as currently carried on. However, the limitations on liability
will not apply in all scenarios and any liability to make a payment arising
from a successful claim by the Purchaser under the Put Option or the SPA could
reduce the consideration and have an adverse effect on Continuing Smiths
business, results of operations, prospects and financial condition.

The Seller has undertaken a customary disclosure process to minimise the risk
of liability under these provisions and the Purchaser has put in place a
policy of warranty and indemnity insurance (W&I Insurance) in respect of
such liabilities typical for a transaction of this nature. However, such
W&I Insurance may be insufficient or may not operate so as to preclude the
possibility of claims being made against the Seller.

1.2     Material new risks to Continuing Smiths

(a)      Continuing Smiths operations will be less diversified and more
susceptible to specific risks, including greater concentration risk and lower
profits

Following Completion, Continuing Smiths business will be smaller and less
diversified which could increase the Seller's exposure to market fluctuations
or downturns within its remaining core businesses. Without the benefit of the
revenues or profits of the Smiths Detection business, Continuing Smiths
profits will be lower and its overall financial performance will depend more
on the performance of each of its continuing businesses and the success of its
business strategy.

(b)      Proposed Transaction may have a disruptive effect on Continuing
Smiths

The Proposed Transaction has required, and will continue to require,
substantial amounts of investment, time and focus from the management teams
and employees of Smiths which could otherwise be spent operating Continuing
Smiths in the ordinary course. Key managers and employees may become
distracted by the Proposed Transaction and, accordingly, decision-making by
Continuing Smiths may be delayed, deferred or otherwise impacted. This
disruption could be prolonged if Completion is materially delayed.

(c)      Reinvestment of proceeds

While Smiths plans to return a large portion of net cash proceeds to
shareholders and maintain a solid investment-grade credit rating, the optimal
deployment of remaining capital for organic growth or acquisitions carries
inherent risks.

2.         Details of any legal and arbitration proceedings

2.1     Continuing Smiths

Other than as disclosed in the annual report and accounts for Smiths for the
fiscal year ended 31 July 2025 (2025 Annual Report), there are no
governmental, legal or arbitration proceedings (including any such proceedings
which are pending or threatened of which Smiths is aware) during the period
covering the 12 months prior to the date of this announcement which may have,
or have had in the recent past, a significant effect on Smiths and/or
Continuing Smiths financial position or profitability.

2.2     Smiths Detection

There are no governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened of which Smiths is aware)
during the period covering the 12 months prior to the date of this
announcement which may have, or have had in the recent past, a significant
effect on Smiths Detection's financial position or profitability.

3.         Material contracts

3.1     Continuing Smiths

Other than as disclosed in the annual report and accounts for Smiths for the
fiscal year ended 31 July 2024 and the 2025 Annual Report, or as set out
below, there are no contracts that have been entered into by Smiths or
Continuing Smiths (not being contracts entered into in the ordinary course of
business): (i) within the period of two years immediately preceding the date
of this announcement that are, or may be, material to Continuing Smiths; or
(ii) that contain any provisions under which Smiths or Continuing Smiths has
any obligation or entitlement that is material to Continuing Smiths.

(a)      Agreements in relation to the Proposed Transaction

A summary of the principal terms of the Proposed Transaction is set out in
Appendix 1 of this announcement.

(b)      Agreement in relation to the disposal of Smiths Interconnect

On 16 October 2025, the Seller entered into an agreement with Molex Electronic
Technologies Holdings, LLC for the sale of the Smiths Interconnect business
for an enterprise value of £1.3bn (the Interconnect Disposal).

3.2     Smiths Detection

Other than as set out below, there are no contracts that have been entered
into by Smiths Detection (not being contracts entered into in the ordinary
course of business): (i) within the period of two years immediately preceding
the date of this announcement that are, or may be, material to Smiths
Detection; or (ii) that contain any provisions under which Smiths Detection
has any obligation or entitlement that is, or may be, material to Smiths
Detection.

(a)      Agreements in relation to the Proposed Transaction

A summary of the principal terms of the Proposed Transaction is set out in
paragraph 1 of Appendix 1 of this announcement.

4.         Significant change in financial position

4.1     Continuing Smiths

Other than in respect of the Interconnect Disposal, and those matters
disclosed in the 2025 Annual Report and the trading statement for the first
quarter to 31 October 2025, there has been no significant change in the
financial performance or financial position of Continuing Smiths since 31 July
2025, the end of the last financial period for which financial information of
Continuing Smiths has been published.

4.2     Smiths Detection

There has been no significant change in the financial performance or financial
position of Smiths Detection since 31 July 2025, the end of the last financial
period for which financial information of Smiths Detection has been published.

5.         Related Party Transactions

Other than those matters disclosed in previously published annual reports and
accounts of Smiths and/or otherwise disclosed in this announcement (including
its Appendices), there were no related party transactions entered into by
Smiths during the period from 31 July 2023 until the date of this
announcement.

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