Safran sells Morpho Detection business to Smiths Group

(Adds shares, analyst comment)

PARIS, April 21 (Reuters) - France's Safran (LSE: 0IU8.L - news) has agreed to sell its U.S (Other OTC: UBGXF - news) .-based Morpho Detection business and related activities to UK engineering firm Smiths Group (Other OTC: SMGKF - news) for an enterprise value of $710 million, the companies said on Thursday.

Morpho Detection will become part of Smiths Group's Detection division, which designs and manufactures sensors that detect and identify explosives, weapons, chemical agents and other contraband, Safran said in a statement on Thursday.

"The threat environment for people and critical infrastructure around the world is constantly evolving and becoming more complex and sophisticated," Smiths Group Chief Executive Andrew Reynolds Smith said.

Shares (Berlin: DI6.BE - news) in the UK company rose 5 percent while Safran edged 0.2 percent higher in a fractionally weaker European market.

Partially state-owned aerospace company Safran said the transaction would generate a capital gain before tax, adding that the deal was expected to close in early 2017.

RBC Capital Markets analyst Rob Stallard said Safran was not expected to use the cash for mergers and acquisitions activity as it focuses on a crucial increase in production of its LEAP aircraft engines for narrow body jets. (Reporting by James Regan, Tim Hepher; editing by Dominique Vidalon and David Clarke)