Smiths pays £476m for Medex

AEROSPACE and defence group Smiths is dipping into its £1.4bn acquisition war chest to buy medical equipment firm Medex for £476m.

Smiths chief executive Keith Butler-Wheelhouse said Medex will help Smiths to grow faster, adding that it is an 'excellent strategic fit' at a 'good price'.

He added: 'This is a significant step in the continuing evolution of Smiths and moves us into the medical devices big league.'

Smiths will pay £322m for the privately-held firm and take on £154m of debt. It expects £169m in sales from Medex which specialises in intravenous catheters.

Analysts said medical devices is a 'real growth market' expanding at 5p% to 6% a year.

Numis Securities analyst Clive Forestier-Walker reckons the deal will offset criticism that Smiths' medical division - which 'contributes just 23% of current profits' - is too small.

Cazenove analyst Simon Pilkington said: 'This is the type of acquisition that management has sought and investors have wanted.'

Smiths has now spent £770m on acquisitions this year - mostly in medical and almost entirely in the US.