Shares in FTSE 100 engineering group Smiths Group soared over 10 per cent this morning as investors digested news that it had been approached by the private equity firm Apax last month. According to a story in the FT, Apax made Smiths a £2.45bn offer for its medical unit, which sells respiratory tubing, analytical devices and other vital equipment to hospitals, particularly in the US.
Smiths promptly rushed out a London Stock Exchange announcement confirming the approach. The buy-out group's "best and final offer" was rejected, management added, on the basis that it undervalued the high-quality, cash-generative nature of the business. An offer of £2.45bn equates to about 13 times the division's 2010 headline operating profits – compared to a multiple of 10 times for the group as a whole based on Friday's closing price.
Price: 1,236p
Tip performance: 15 per cent
