Private equity makes another medtech grab

At long last, the engineering conglomerate Smiths Group managed to offload its medical division this week. A subsidiary of funds advised by the US firm TA Associates has paid $2.3bn for the unit, which makes hospital equipment such as drug pumps, pulse oximeters and IV catheters. The deal is one of the largest private equity purchases of a medtech in a decade – but, judging by the 10% fall in Smiths’ share price since, investors were expecting a still higher price. It is unclear that the company could have got much more for Smiths Medical, though: the unit’s revenues are forecast to expand even more slowly than Smiths Group, which itself can only muster an annual growth rate of 4%. The sale will net Smiths an initial $1.8bn in cash with a potential $200m earnout to follow, and Smiths will retain a 30% stake in the holding company TA will create. Smiths has tried to offload the medical unit several times, most recently laying plans for an IPO in mid-2020. This was shelved last March, partly so Smiths could focus on making ventilators for the UK government as it raced to cope with Covid-19 hospitalisations.