Founded in 1851 by Samuel Smith, as a family clock and watch-making business, Smiths is now the UK´s leading specialist engineer, operating internationally in a number of distinct sectors: 
Detection (chemical and explosives detection systems); Medical (single-use devices and equipment for anaesthesia/respiratory care and infusion therapy); Aerospace (avionic systems and equipment); Specialty Engineering (mechanical seals, electrical interconnect, marine systems, tubular systems and flexible technologies). 
Headquarters are in London and manufacturing businesses are located principally in the UK, USA and continental Europe. The chief executive is Keith Butler-Wheelhouse. The company´s shares are listed only on the London Stock Exchange, and with a market capitalisation of approx. £4.3 billion, Smiths Group is a constituent of the FTSE100 index of the largest UK companies (at no. 62, May 2003). 

Smiths Group plc (“Smiths” or the “Company”) announces that it has agreed to sell Smiths Aerospace division (“Aerospace”) to General Electric Company (“GE”) for a total cash consideration of US$4.8 billion (the “Sale”).  Following the Sale, the board of directors of Smiths (the “Board”) proposes to return £2.1 billion to shareholders.

Highlights:

• The disposal price for Aerospace of US$4.8 billion recognises the high quality of the business together with Smiths substantial investment in aerospace technology over the past several years.

• The Sale accelerates the delivery of returns to shareholders.

• Smiths continuing businesses serve strong and growing markets. The Board believes that the continuing Smiths Group has enhanced financial characteristics and is well positioned to generate substantial returns.  A separate announcement is being made today in relation to the further development of Smiths Detection.

• Following completion of the Sale, Smiths is expected to generate improved returns on capital and enhanced margins.  The net effect of the Sale and the intended return of capital to shareholders would have been accretive to Smiths headline earnings per share for pro forma 2006.

• The Board has assessed the capital structure of the Company.  Following the intended return of capital to shareholders, Smiths is expected to have debt ratings of Baa2 and BBB+.  The Board is satisfied that the Company has flexibility to execute its strategy whilst maintaining a solid investment grade rating.  The Board also believes that the enhanced financial characteristics of the Company will enable a progressive dividend policy, targeting dividend cover of 1.8 times.

• The Board proposes, subject to completion of the Sale and shareholder approval, to return £2.1 billion - out of the net proceeds estimated to be £2.25 billion - by means of a B share scheme, combined with a share consolidation, shortly after the completion of the Sale. 

• The Sale is conditional, amongst other things, upon obtaining merger and anti-trust clearances, including in the United States and from the European Commission, and the approval of Smiths shareholders at an extraordinary general meeting (the “Extraordinary General Meeting”).  The Sale is targeted for completion during the second quarter of 2007.