Sale of Smiths Aerospace

Smiths Group PLC
15 January 2007



FOR IMMEDIATE RELEASE                                            15 January 2007


                                SMITHS GROUP PLC

                       SALE OF SMITHS AEROSPACE DIVISION


    Smiths Group plc agrees the sale of Smiths Aerospace division to General
   Electric Company for US$4.8 billion and proposes return of £2.1 billion to
                                  shareholders


Smiths Group plc ('Smiths' or the 'Company') announces that it has agreed to
sell Smiths Aerospace division ('Aerospace') to General Electric Company ('GE')
for a total cash consideration of US$4.8 billion (the 'Sale'). Following the
Sale, the board of directors of Smiths (the 'Board') proposes to return £2.1
billion to shareholders.

Highlights:

   • The disposal price for Aerospace of US$4.8 billion recognises the high
    quality of the business together with Smiths substantial investment in
    aerospace technology over the past several years.

   • The Sale accelerates the delivery of returns to shareholders.

   • Smiths continuing businesses serve strong and growing markets. The Board
    believes that the continuing Smiths Group has enhanced financial
    characteristics and is well positioned to generate substantial returns. A
    separate announcement is being made today in relation to the further
    development of Smiths Detection.

   • Following completion of the Sale, Smiths is expected to generate
    improved returns on capital and enhanced margins. The net effect of the Sale
    and the intended return of capital to shareholders would have been accretive
    to Smiths headline earnings per share for pro forma 2006.

   • The Board has assessed the capital structure of the Company. Following
    the intended return of capital to shareholders, Smiths is expected to have
    debt ratings of Baa2 and BBB+. The Board is satisfied that the Company has
    flexibility to execute its strategy whilst maintaining a solid investment
    grade rating. The Board also believes that the enhanced financial
    characteristics of the Company will enable a progressive dividend policy,
    targeting dividend cover of 1.8 times.

   • The Board proposes, subject to completion of the Sale and shareholder
    approval, to return £2.1 billion - out of the net proceeds estimated to be
    £2.25 billion - by means of a B share scheme, combined with a share
    consolidation, shortly after the completion of the Sale.

   • The Sale is conditional, amongst other things, upon obtaining merger and
    anti-trust clearances, including in the United States and from the European
    Commission, and the approval of Smiths shareholders at an extraordinary
    general meeting (the 'Extraordinary General Meeting'). The Sale is targeted
    for completion during the second quarter of 2007.

Keith Butler-Wheelhouse, Chief Executive of Smiths, commented:

'Our objective is to create superior shareholder value. We focus our investment
where we can take leading positions in growth markets. This has certainly been
true in Aerospace. Over the past five years, we have invested heavily in
aerospace technology. This investment, together with the successful efforts of
our dedicated employees, has won us positions on every major military and
commercial programme. This is a great achievement by the Aerospace team.

'The structure of the aerospace industry is changing - in particular its
increased capital requirements and the growing importance of supplier scale,
especially as the next generation of large programmes kicks in.

'The Board has considered these issues and the opportunities for Smiths going
forward and last autumn instigated a thorough process which has led to today's
announcement. By selling Aerospace, we crystallise the value for our
shareholders. At the same time, we know that this business is going to a great
owner.

'Looking forward, Smiths continuing businesses serve markets with attractive
growth prospects, enabling delivery of enhanced returns and strong cash
conversion.'

This summary should be read in conjunction with the full text of the following
announcement.


A presentation for analysts and investors will be hosted today at 9:30am (UK
time) at the Savoy Hotel, Strand, London WC2R 0EU by Keith Butler-Wheelhouse,
Chief Executive of Smiths, and Jeff Immelt, Chairman and Chief Executive Officer
of GE. The event will be webcast live at www.smiths.com. Alternatively,
interested parties can listen in to the live briefing via telephone by calling
[phone] or [phone] (listen only). An interview with Keith
Butler-Wheelhouse and Jeff Immelt can be seen on www.smiths.com and
www.cantos.com

For media, a joint press conference will be hosted today at 11:30am (UK time) at
the Savoy Hotel, Strand, London WC2R 0EU.

For bondholders, a conference call will be hosted by John Langston, Smiths Group
Finance Director, today at 1:00pm (UK time). Dial-in: [phone].


A circular (the 'Circular') containing further details of the Sale and setting
out the notice of the Extraordinary General Meeting will be sent to Smiths
shareholders.


Contacts:

Smiths Group plc                                   [phone]
Russell Plumley (Investor Relations)
Chris Fox (Media)

Lead Financial Adviser

Evercore Partners                                  [phone]
Bernard Taylor
Julian Oakley

Joint Financial Advisers and Brokers

Credit Suisse                                      [phone]
James Leigh-Pemberton
Alex Phillips

JPMorgan Cazenove                                  [phone]
David Mayhew
Edmund Byers

PR Adviser

Brunswick                                          [phone]
Jon Coles
Jonathan Glass


Evercore Partners Limited ('Evercore Partners'), which is authorised and
regulated in the United Kingdom by the Financial Services Authority, is acting
for Smiths and no one else in connection with the matters referred to in this
announcement and will not be responsible to any person other than Smiths for
providing the protections afforded to clients of Evercore Partners, or for
providing advice in relation to these matters.

Credit Suisse Securities (Europe) Limited ('Credit Suisse'), which is authorised
and regulated in the United Kingdom by the Financial Services Authority, is
acting for Smiths and no one else in connection with the matters referred to in
this announcement and will not be responsible to any person other than Smiths
for providing the protections afforded to clients of Credit Suisse, or for
providing advice in relation to these matters.

JPMorgan Cazenove Limited ('JPMorgan Cazenove'), which is authorised and
regulated in the United Kingdom by the Financial Services Authority, is acting
for Smiths and no one else in connection with the matters referred to in this
announcement and will not be responsible to any person other than Smiths for
providing the protections afforded to clients of JPMorgan Cazenove, or for
providing advice in relation to these matters.


FOR IMMEDIATE RELEASE                                            15 January 2007

                                SMITHS GROUP PLC

                       SALE OF SMITHS AEROSPACE DIVISION


    Smiths Group plc agrees the sale of Smiths Aerospace division to General
   Electric Company for US$4.8 billion and proposes return of £2.1 billion to
                                  shareholders

Smiths Group plc ('Smiths' or the 'Company') announces that it has agreed to
sell Smiths Aerospace division ('Aerospace') to General Electric Company ('GE')
for a total cash consideration of US$4.8 billion (the 'Sale'). Following the
Sale, the board of directors of Smiths (the 'Board') proposes to return £2.1
billion to shareholders.

Aerospace

Aerospace comprises two principal business units - Aerospace Systems and
Aerospace Components. Aerospace Systems designs, manufactures and provides
in-service support for digital, electrical power and mechanical systems for both
the military and commercial markets. Aerospace Components supplies high-value
components to the principal aircraft engine manufacturers. In addition, Times
Microwave Systems Inc. ('TMS'), reported within Specialty Engineering, is
included as part of the Sale. TMS products include components for military and
commercial aerospace, shipboard and wireless applications.

Aerospace, headquartered in London, has approximately 11,500 employees and
operates manufacturing facilities in five countries. Aerospace has developed
organically and through the acquisition of Lear Siegler in 1987 and the merger
with TI Group in 2001.

Smiths has invested significantly over the past five years to position Aerospace
as a Tier 1 systems supplier and integrator. Aerospace Systems' products and
services include: common core computing systems, data monitoring and recording
systems, flight management systems, mission and stores management systems,
navigation products, cockpit displays, fuel systems, power distribution and
management, generators, power conversion, landing gear systems, high lift
systems, military mission systems, general actuation, structures and propellers.
Aerospace Components supplies rings, combustors, injectors, shafts, outer
casings, liners, mixers and other components for jet engines using specialised
manufacturing technologies including flash welding, cold rolling, chemical
milling, broaching and other complex processes.

For the 53 week period ended 5 August 2006, Aerospace recorded operating profits
of £156 million on a turnover of £1.3 billion. Total Aerospace net assets before
intercompany funding and gross assets were £808 million and £1,254 million
respectively as at 5 August 2006.

Background to and Reasons for the Proposed Sale

The board of directors of the Company (the 'Board') believes the agreed price of
US$4.8 billion recognises the high quality of the business together with Smiths
substantial investment in aerospace technology. The sale accelerates the
delivery of value to shareholders.

Smiths continuing businesses serve strong and growing markets. The Board
believes that the continuing Smiths Group has enhanced financial characteristics
and is well positioned to generate substantial returns.

Keith Butler-Wheelhouse has agreed to defer his retirement by four months, to 31
July 2008, in order to continue to lead Smiths Group as Chief Executive
throughout the coming financial year.

Further Details of the Proposed Sale

A Circular setting out the notice of the extraordinary general meeting (the
'Extraordinary General Meeting'), including the recommendation of the Board to
vote in favour of the Sale, will be sent to Smiths shareholders as soon as
practicable.

The Sale is conditional, amongst other things, upon obtaining merger and
anti-trust clearances, including in the United States and from the European
Commission, and the approval of Smiths shareholders at an Extraordinary General
Meeting The Sale is targeted for completion during the second quarter of 2007.

Smiths has agreed to pay GE a break fee in the event that Smiths shareholders do
not vote in favour of the Sale. GE has agreed to pay Smiths a break fee in the
event the Sale does not complete due to GE's failure to use reasonable
endeavours to obtain certain regulatory approvals. In each case, the amount of
the break fee has been set at approximately US$110 million.

Return of Capital to Shareholders and Financial Impact

The Board believes that the Sale, as well as Smiths continuing cash-flow
profile, enables the disposal of Aerospace to be accompanied by a return of
capital to shareholders. The Board proposes to return £2.1 billion - out of the
net proceeds estimated to be £2.25 billion - following completion of the Sale by
means of a B share scheme, combined with a share consolidation, shortly after
the completion of the Sale. The capital return will be subject to shareholders'
approval at a separate extraordinary general meeting (the 'Extraordinary General
Meeting for the Return of Capital').

The proposed return of capital is equivalent to approximately 37 percent of the
market capitalisation of Smiths as at 12 January 2007 and the effect of the
share consolidation would be to reduce the number of ordinary shares in issue by
the appropriate percentage, by reference to the market capitalisation
immediately following completion.

The net effect of the Sale and the intended return of capital to shareholders
would have been accretive to Smiths headline earnings per share for pro forma
2006 and similarly would have reduced year end net debt to approximately £800
million.

The tax impact of the Sale on the continuing Smiths is expected to be minimal.

A circular will be sent to shareholders shortly after completion of the Sale,
convening the Extraordinary General Meeting for the Return of Capital to approve
the share consolidation accompanying the proposed B Share scheme.

Prospects for the Continuing Smiths

Following the Sale, Smiths three divisions, Detection, Medical and Specialty s
erve markets with attractive growth prospects, offering good prospects for
enhanced returns.

The Board has assessed the capital structure of the Company. Following the
intended return of capital to shareholders, Smiths is expected to have debt
ratings of Baa2 and BBB+. The Board is satisfied that the Company has
flexibility to execute its strategy whilst maintaining a solid investment grade
rating. The Board also believes that the enhanced financial characteristics of
the Company will enable a progressive dividend policy targeting dividend cover
of 1.8 times.


Contacts:

Smiths Group plc                                   [phone]
Russell Plumley (Investor Relations)
Chris Fox (Media)

Lead Financial Adviser

Evercore Partners                                  [phone]
Bernard Taylor
Julian Oakley

Joint Financial Advisers and Brokers

Credit Suisse                                      [phone]
James Leigh-Pemberton
Alex Phillips

JPMorgan Cazenove                                  [phone]
David Mayhew
Edmund Byers

PR Adviser

Brunswick                                          [phone]
Jon Coles
Jonathan Glass


Evercore Partners Limited ('Evercore Partners'), which is authorised and
regulated in the United Kingdom by the Financial Services Authority, is acting
for Smiths and no one else in connection with the matters referred to in this
announcement and will not be responsible to any person other than Smiths for
providing the protections afforded to clients of Evercore Partners, or for
providing advice in relation to these matters.

Credit Suisse Securities (Europe) Limited ('Credit Suisse'), which is authorised
and regulated in the United Kingdom by the Financial Services Authority, is
acting for Smiths and no one else in connection with the matters referred to in
this announcement and will not be responsible to any person other than Smiths
for providing the protections afforded to clients of Credit Suisse, or for
providing advice in relation to these matters.

JPMorgan Cazenove Limited ('JPMorgan Cazenove'), which is authorised and
regulated in the United Kingdom by the Financial Services Authority, is acting
for Smiths and no one else in connection with the matters referred to in this
announcement and will not be responsible to any person other than Smiths for
providing the protections afforded to clients of JPMorgan Cazenove, or for
providing advice in relation to these matters.


About Smiths

Smiths (LSE: SMIN), a FTSE listed company with a market capitalisation of
approximately £5.6 billion, is a global applied technology business with
market-leading positions worldwide in its three chosen areas of specialisation.
Its customers range from defence contractors to petrochemical companies to
hospitals. Headquartered in London, Smiths has its manufacturing businesses
principally in the U.K., U.S.A. and continental Europe. For more information,
visit the Company's website at www.smiths.com.

About Aerospace

Aerospace, a division of Smiths, is a leading global aerospace systems company,
with approximately 11,500 employees. Aerospace provides key systems on all major
military and civil aircraft platforms and highly engineered components to all
the major aircraft engine manufacturers as well as associated aftermarket parts
and repairs for both its systems and components business lines.

About GE

GE (NYSE: GE) is Imagination at Work - a diversified technology, media and
financial services company focused on solving some of the world's toughest
problems. With products and services ranging from aircraft engines, power
generation, water processing and security technology to medical imaging,
business and consumer financing, media content and advanced materials, GE serves
customers in more than 100 countries and employs more than 300,000 people
worldwide. For more information, visit the GE web site at www.ge.com

About GE Aviation

GE Aviation is one of the world's leading producers of large and small jet
engines for commercial and military aircraft. GE Aviation also supply
aircraft-derived engines for marine applications and provide aviation services.




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