By Yadarisa Shabong and Aby Jose Koilparambil

(Reuters) -Britain's Smiths Group said on Friday it plans to spin off its Smiths Detection business, known for its baggage-screening kit in airports and explosive detectors, lifting the engineering group's shares to a record high.

Under pressure from U.S. activist investor Engine Capital, Smiths Group also said it would divest its interconnect arm, which supplies electronic components, to focus on industrial technologies through its John Crane and Flex-Tek businesses.

Earlier this month, Engine Capital, which owns a stake of around 2% in the company, called for its sale or break-up to maximise shareholder value.

Smiths Group CEO Roland Carter said in a statement detailing the break-up plan that the board had spent "considerable time" evaluating the options to address the "persistent discount to the significant value embedded within the group".

Shares in the FTSE 100 firm surged 17.3% to a record high of 2,188 pence in early trade.

JP Morgan analysts said in a note that many investors had long argued for more portfolio action to unlock value in Smiths Group's shares and the new move should be "taken very well".

Smiths Detection, the second-largest division, which contributed 28% of total revenue in the fiscal 2024 year, will be separated through a demerger or sale after the disposal of the interconnect business, Smiths Group said.

Smiths Group said a "large portion" of the proceeds from the disposals will be returned to shareholders as it also raised its share buyback programme by 350 million pounds ($434.91 million) to 500 million pounds.

The company, which flagged a cybersecurity incident earlier this week, kept its full year forecasts unchanged, saying there was limited impact from the attack.

Smiths Group's break-up proposal follows industrial giant Honeywell's plan last month to separate its aerospace business, after pressure from activist investor Elliott.

($1 = 0.8048 pounds)

(Reporting by Yadarisa Shabong and Aby Jose Koilparambil in Bengaluru; Editing by Savio D'Souza and Alexander Smith)