Acquisition

Smiths Group PLC
06 December 2004


     $925 million acquisition moves Smiths into medical devices big league
     _____________________________________________________________________



•         Smiths will pay 9.3 times 2004 EV/EBITDA for privately-held Medex, Inc

•         Will increase Smiths Medical's sales by a third and profits by nearly
          a half

•         Will give Smiths a leading position in anaesthesia and safety devices

•         Significant opportunities for revenue and cost synergies

•         Immediately earnings enhancing, will exceed WACC in 2nd full year



Smiths Group announced today that it has agreed to acquire the privately-held US
medical device company, Medex, Inc, in a transaction which will greatly enhance
the presence of Smiths Medical in the US and international markets for devices
used in critical care.


Commenting on the acquisition of Medex, Keith Butler-Wheelhouse, chief executive
of Smiths said:  'Medex is a first rate company, is an excellent strategic fit
and we have secured it at a good price.  This transaction is a significant step
in the continuing evolution of Smiths, and moves us into the medical devices big
league.'


Smiths will pay the current owners of Medex $625m in cash for the company's
equity, subject to any closing adjustment, and will assume some $300m of net
debt.  One Equity Partners, an affiliate of JP Morgan Chase & Co, owns 83.2% of
the company, with the remainder held by management and employees.  The
acquisition will be funded from a combination of Smiths' existing cash resources
and additional US dollar borrowings.   The addition of Medex will be earnings
enhancing from the outset.  Completion, expected in the New Year, is subject to
regulatory approval.


Medex is a leading supplier of infusion equipment used in critical care,
specialising in intravenous infusion catheters which prevent needle-stick
injuries.  Its products are highly complementary with the Smiths Medical range,
selling to the same customer base in hospitals and other healthcare locations.
In a full year, the addition of Medex will increase the sales of Smiths Medical
by around a third and profits by almost a half.


For the 12 months to 31 December 2004, Medex is expected to achieve sales of
$330m, underlying operating profit of $75m and EBITDA of $100m.  For the 9
months to September, Medex reported underlying operating profit of $59m and
pre-tax profit of $39m.  The company was formed through an MBO by its current
management team in February 2001 from Saint Gobain Performance Plastics Corp.
It subsequently acquired Inhalation Plastics, Inc in May 2002 and the vascular
access business of Ethicon Endo-Surgery ('Jelco') from Johnson & Johnson in May
2003.  The reported audited loss before tax for the year ended December 2003 was
$7m and net assets at that date were $91m. Smiths does not believe this
reflected the underlying performance of Medex, as it included only a 7 month
contribution from Jelco and it was also depressed by a number of non-recurring
charges, including $18m relating to one-off acquisition costs.  The businesses
have, on a pro forma basis, delivered strong underlying sales growth and cash
generation over the past three years.


Commenting on the benefit of bringing Medex into Smiths Medical, Lawrence Kinet,
board member for the division said:  'This is a great opportunity for Smiths
Medical.  Annual sales will be approaching $1.25 billion, and we become more
competitive by offering a wider range of products.  We'll have a greater
presence in critical care, especially in safety devices, and we can use our
global network to take the Medex range into new markets where we know there is
strong demand.'


Headquartered in Carlsbad, California, Medex employs some 2,000 people,
including 1,100 in the US.  The US operations are located in Ohio, Illinois,
Connecticut and Georgia, with additional plants in Mexico, Germany, Italy and
the UK.  The senior management team, led by Dominick Arena, president & chief
executive officer, have initially agreed to remain in place for at least one
year following completion.  Integration teams will deliver sales, operational
and administration synergies quickly, once Medex becomes part of Smiths Group.


Two thirds of Medex's sales are of intravenous catheters, and its products are
recognised as among the market leaders. The range incorporates devices which
help prevent accidental injuries caused by 'sharps' which remain exposed after
use.  These Medex products are aligned in the market with the Smiths Needle-Pro
range of safety devices.  Other product lines include pre-packaged trays of
single-use products for catheterisation procedures, similar to Smiths' kits for
anaesthesia applications.  Medex also makes advanced syringe pumps which
incorporate medication error detection, while Smiths is the leading supplier of
ambulatory infusion pumps in the worldwide market.


Through this transaction, Smiths expects to generate significant additional
sales of both Smiths Medical and Medex products.  The Medex products will
increase Smiths' presence at a number of important customer call points,
especially infection control departments, intensive care units and respiratory
departments.  Geographically, two thirds of Medex's sales are made in North
America and, while the company has already successfully established a presence
in Europe, there is considerable opportunity to take its products more widely
into world markets through Smiths Medical International.


Smiths Group was advised by Morgan Stanley.  Banc of America Securities LLC
acted as lead financial advisor to Medex and One Equity Partners, and Credit
Suisse First Boston LLC and Lehman Brothers, Inc were co-advisors in this
transaction.


Smiths Medical is a leading supplier of devices used during critical and
intensive care, surgery, post-operative care during recovery, and in a series of
high-end home infusion therapies.  For the year ended 31 July 2004 Smiths
Medical had sales of £488m ($853m).


Smiths Group offers advanced technology solutions in aerospace, detection,
medical and specialty engineering sectors.  Listed on the London Stock Exchange,
the company recorded sales of  £2.7 billion ($4.7 billion) and pre-tax profit on
ordinary activities of £350m ($613m) for the year ended 31 July 2004.  Close to
60% of operating income originates from the United States, where 13,000 of the
company's total 27,000 people are employed.


An interview with Keith Butler-Wheelhouse, chief executive of Smiths Group is
available in video, audio and text on www.smiths-group.com and on
www.cantos.com.


There will be a conference call for investors at 11.00am UK time today, Monday,
6 December.  To take part, in the UK, telephone [phone].  From overseas,
telephone [phone].  The passcode is 'Medex'.  The call will be
archived on [phone].

                                     -ends-


Enquiries:
Media: Caroline Harris                    Investors: Russell Plumley    
       020 8457 8403                                 020 8457 8203
e-mail:                                   e-mail: 
[e-mail]          [e-mail]



                      This information is provided by RNS
            The company news service from the London Stock Exchange           MGZDDFGDZM