Yahoo Finance Smiths Group halts plan to split off NHS ventilators arm
The driving force behind the UK’s top ventilator consortium has suspended plans to spin off the £2.5 billion medical unit making the devices to help the NHS battle the outbreak.
Smiths Group, a conglomerate making everything from airport scanners to gas valves, had aimed to hive off the ventilator-making unit Smiths Medical by the end of June but on Tuesday hit the pause button due to market chaos.
The division makes the paraPAC plus ventilator, a portable breathing device found in ambulances and central to consortium Ventilator Challenge UK’s bid to produce 10,000 ventilators for the Government to fill an NHS shortfall.
Splitting off the division now would have complicated ventilator efforts, with Smiths diverting staff and resources into Smiths Medical over the next few months to ramp up production.
“It is simply not practicable to complete the separation in current circumstances,” Smiths said. “Moreover, Smiths and Smiths Medical need to focus on navigating the external challenges — including the delivery of ventilators and other critical care devices.”
The FTSE 100 firm had planned to de-merge the company by handing shares in Smiths Medical to its large base of shareholders in a similar scenario to the M&G split from Prudential.
Due to the coronavirus crash, Smiths shares have plummeted 25% in the year to date, meaning the value of Smiths Medical shares would be much lower than shareholders had hoped. Smiths is likely to wait until a share price recovery before divorcing the division.
The firm, led by Andy Reynolds Smith, also cut the interim dividend today with the board saying it wanted to be “prudent”. Reynolds Smith said: “Smiths is a strong and naturally resilient business and we will come through this period well positioned for the future.”
Shares rose 6% higher after it highlighted several areas of strength, including a record order book for its airport scanner unit Smiths Detection. John Crane, the oil and gas valve division, has also slashed capital expenditure to cushion a slump in the oil price to $20.
The Share Centre’s Ian Forrest said: “The cancellation of the dividend is disappointing for investors but hardly unexpected.”
