Proposed Merger of Smiths Industries plc and TI Group plc
19 September 2000
Proposed Merger of Smiths Industries plc and TI Group plc
NEW YORK--Sept. 18, 2000--The Boards of Smiths Industries plc and TI Group plc are pleased to announce that they have unanimously agreed the terms of a merger of their two companies.The Merger will create a new force in specialist engineering with a pro forma combined market capitalization of approximately (pound)4.5 billion (based on the London Stock Exchange closing market prices for the two companies on September 15, 2000). Smiths Industries and TI Group Shareholders will hold approximately 57.6 per cent. and 42.4 per cent, respectively of the enlarged issued ordinary share capital of Smiths Industries following completion of the Merger.
The Merger will create:
| -- | a group comprising four world leading businesses in the aerospace, medical, sealing solutions and industrial equipment sectors with exposure to high growth markets |
| -- | a group with combined sales of approximately (pound)3 billion with the management, resources and scale to take advantage of opportunities to develop its chosen businesses |
| -- | a group with attractive financial characteristics including high operating margins, strong cash flows and a strong balance sheet |
| -- | a global organization with a strong presence in the US, Europe and Asia-Pacific and a worldwide distribution capability |
| -- | a stronger combined management team with complementary cultures |
| -- | substantial opportunities in the combined aerospace division, arising from reinforced first tier status and complementary customer bases |
| -- | the opportunity to make initial cost savings of at least (pound)25 million in the first full year of trading following completion of the Merger |
Under the terms of the Merger, TI Group Shareholders will receive 0.46 of a new Smiths Industries Share for every TI Group Share. In addition, subject to the Merger becoming effective, TI Group Shareholders will be entitled to receive a special interim dividend of 12p per TI Group Share payable by TI Group for the year ending December 31, 2000.
Further to the announcement made on September 15, 2000, TI Group will continue to proceed with the sale of its Automotive Systems Division. Subsequent announcements will be made in due course as developments warrant. To the extent that the net proceeds from this disposal exceed (pound)900 million (including net debt assumed by a purchaser but less costs and tax), TI Group Shareholders will participate in the excess through the receipt of deferred proceeds. Applying the preliminary offers received and based on the Board of TI Group's estimate of tax and costs, the Board of TI Group estimates that the deferred proceeds would be worth between 20p and 65p per share.
Commenting on the Merger, Sir Christopher Lewinton, Chairman of TI Group, said:
"The combination of the sale of TI Group Automotive Systems Division and the creation of the Merged Group provides an excellent opportunity for shareholder value creation. TI Group shareholders will not only benefit from the value realized from the disposal, but will also enjoy the opportunities that the enhanced platform will provide for our business. This deal provides for an exciting future".
Commenting on the Merger, Keith Butler-Wheelhouse, Chief Executive Officer of Smiths Industries, said:
"This exciting Merger doubles the size of our existing Aerospace operations and adds a new competency to the Smiths Industries portfolio in TI Group's world leading Sealing Solutions business. The Merged Group will be well placed for future growth".