Smiths to extend detection systems activities with agreed offer for Barringer Technologies Inc.
Smiths Group is to extend its specialist activities in chemical detection and protection systems with the acquisition of Barringer Technologies Inc., a publicly traded company listed on NASDAQ. Barringer manufactures drug and explosives detection equipment used extensively for airport security and law enforcement applications.
Agreement has been reached in principle for Smiths to acquire Barringer for $87.6m (60m) gross, payable in cash. Barringer has substantial cash balances which are expected to reduce the net cost of the acquisition to approximately $49 million at closing.
Smiths' offer of $11.05 per share compares with Barringer's closing share price, on Thursday 8 March, of $10.00. The offer has been recommended by the Board of Barringer to its shareholders and is now subject to their approval and the approval of the regulatory authorities, with decisions expected by the end of April.
In the year to 31 December 2000, Barringer reported sales of $28 million, representing a 39% increase over the previous year, and operating profits of $5 million.
Keith Butler-Wheelhouse, chief executive of Smiths Group commented: "The application of technologies which reduce security threats to civilians and the armed forces is creating a considerable business opportunity for Smiths. Barringer is strong in civilian markets, such as counter-terrorism, complementing our existing military activities and reinforcing Smiths' position as one of the worlds leading specialists in nuclear, biological and chemical detection equipment."
Barringers principal product area is a range of portable devices to detect explosives and narcotics. The US Federal Aviation Authority is a major customer and with the installation of explosive detection devices now a mandatory requirement in most US airports, the FAA has recently signed a contract with Barringer for the supply of up to 800 detectors over the next 3 years, valued at some $28m.
International air safety legislation is creating a new export demand and as Barringers installed base grows, the company is developing a considerable after-sales support business, including maintenance contracts. In addition to the civil aviation market, Barringer's US non-military customer base includes the FBI, the Drug Enforcement Agency and numerous law enforcement organisations.
In a development of its core technology, Barringer has recently launched a walk-through trace detector and will soon be launching an automated baggage screening system, developed under a grant from the FAA. Barringer's detection systems are also being tested for commercial applications in the pharmaceutical, food processing and other industries.
Barringer's core technology is the same as that used by the existing Smiths Detection & Protection Systems Division businesses, Graseby Dynamics in the UK and Environmental Technologies Group in the US. The acquisition will therefore lead to significant synergies in future product development and offers the prospect of increased exports, using Smiths' established sales channels.
With its headquarters in Warren, New Jersey, Barringer's main manufacturing base is near Toronto, Canada and the company has customer support offices in the UK, France and Malaysia. Together, these operations employ 170 people.
Smiths Group is a global business with market-leading positions in each of its four operating businesses: advanced aerospace systems; mechanical and polymer seals; medical devices and critical care equipment; and specialised industrial products for interconnect & air movement applications. Further information on Smiths can be found on the company's website: http://www.smiths-group.com
For further information: Richard Bayliss, tel: 020 8457 8203