Finance
UK's Smiths Group break-up plan faces security concerns amid tight regulation
Published by Global Banking and Finance Review
Posted on January 31, 2025
2 min readLast updated: January 26, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on January 31, 2025
2 min readLast updated: January 26, 2026
Smiths Group's plan to sell its detection business faces UK security concerns, requiring a buyer with defence ties to navigate regulations.
By Aby Jose Koilparambil
(Reuters) - UK's Smiths Group will have to navigate national security concerns to secure a sale of its screening and detection business to a foreign buyer, but the engineering group believes the disposal is feasible, its CEO told analysts.
Since the UK's National Security and Investment Act took effect in 2022, scrutiny of deals has intensified, with transactions involving Chinese or Russian-linked firms facing hurdles.
The FTSE 100 company said earlier it would separate Smiths Detection, known for its baggage-screening kit in airports and explosive detectors, through a demerger or sale after the disposal of the interconnect business.
"These businesses provide critical products... There will be national security and control issues we must address, and we have accounted for them in our plans," CEO Roland Carter told analysts on Friday.
The Smiths Interconnect business supplies defence and satellite communications antenna systems and multi-function radio frequency systems, among other products.
A buyer will likely have to be a defence or government contracting firm with existing relationships in order to get through regulatory approvals, said Andrew Marsh, fund manager at Artemis Investment Management, a top-five shareholder in Smiths Group.
Marsh also said the government has to be "less restrictive" on such matters.
Major UK interventions include blocking Beijing Infinite Vision Technology from acquiring University of Manchester intellectual property and ordering Chinese-owned Nexperia to sell 86% of microchip plant Newport Wafer Fab.
Other cases involved Hong Kong's Super Orange HK's failed takeover of Pulsic, and Russian-backed LetterOne's forced sale of broadband provider Upp.
Last year, Abu Dhabi's International Media Investments abandoned its bid for The Telegraph and The Spectator after new laws barred foreign state ownership of UK newspapers.
The Labour government is pushing regulators to ease burdens on businesses and has ousted the country's competition watchdog chairman for not aligning with its economic acceleration strategy.
(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Devika Syamnath)
Smiths Group must navigate national security concerns to secure a sale of its screening and detection business to a foreign buyer, especially under the scrutiny of the National Security and Investment Act.
The National Security and Investment Act, effective since 2022, has intensified scrutiny of business transactions, particularly those involving firms linked to China or Russia.
A suitable buyer for Smiths Detection would likely be a defence or government contracting firm with existing relationships to navigate through the regulatory approvals.
The UK government has intervened in several cases, including blocking acquisitions by Chinese firms and ordering the sale of stakes in companies like Nexperia due to national security concerns.
The Labour government is pushing regulators to ease burdens on businesses and has replaced the competition watchdog chairman to align with its economic acceleration strategy.
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