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Smiths Industries. (SMIN)

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Monday 23 October, 2000

Smiths Industries.

Merger Update

Smiths Industries PLC
23 October 2000

                                                                           
 
Not for release, publication or distribution in or into, Canada, Japan or
Australia 
 
 

   DESPATCH OF SHAREHOLDER DOCUMENTATION RELATING TO PROPOSED 
        MERGER OF SMITHS INDUSTRIES PLC AND TI GROUP PLC

 
Further to the announcement of the proposed Merger of Smiths Industries plc
and TI Group plc dated 18 September 2000, the Boards of Smiths Industries plc
and TI Group plc announce that they have today despatched the documents
containing, amongst other things, information for shareholders on the
proposed Merger of their respective companies and notices convening the
shareholder meetings which are necessary to implement the Merger.
 
As previously announced, the Merger is to be effected by way of a Scheme of
Arrangement of TI Group plc under Section 425 of the Companies Act. The
indicative timetable for implementation of the Merger is currently expected 
to be as follows:
 
                                                               2000
Smiths Industries Extraordinary General Meeting      11.00 am on 17 November
TI Group Court Meeting                               11.00 am on 17 November
TI Group Extraordinary General Meeting               11.15 am on 17 November
Court Hearing                                        30 November
Scheme Record Time                                   6.00 pm on 1 December
Last day of dealings in TI Group shares              1 December
Effective Date of the Scheme                         4 December
Commencement of dealings on the London Stock Exchange
in new Smiths Industries shares                      8.00 am on 4 December
 
It should be noted that the above timetable of principal events is indicative
only and will depend, amongst other things, on the date upon which the Court
sanctions the Scheme. Further announcements will be made as appropriate.
 
The Merger has the unanimous support and recommendation of the Boards of
Smiths Industries plc and TI Group plc.
 
The Merger will create:
 
* a new group which will be focused and whose resources will be directed to
give selective support to the Merged Group's highest margin and most rapidly
growing businesses 
 
* a group comprising four world class businesses in the aerospace, medical
systems, sealing solutions and industrial equipment sectors 
 
* a group with combined sales of approximately £3 billion (after the sale of
TI Group Automotive Systems) with the management, resources and scale to take
advantage of opportunities to develop its chosen businesses 
 
* a global organisation with a strong presence in the US, Europe and
Asia-Pacific and a worldwide distribution capability 
 
* the opportunity to bring together Smiths Industries electronics technology
and Dowty's mechanical expertise, broadening the range of products which can
be delivered and reinforcing the two companies' status as important suppliers
to major customers 
 
* a stronger combined management team formed from two existing teams with
similar cultures 
 
* a group benefiting from good overall operating margins, strong cash flows
and, following the sale of TI Group Automotive Systems, a strong balance
sheet 
 
* the opportunity to make initial cost savings of at least £25 million in the
first full year of trading following completion of the Merger* 
Under the terms of the Merger, TI Group shareholders will receive 0.46 of a
new Smiths Industries share for every TI Group share, representing ownership
of approximately 42.3% of the merged Company (without taking account of the
exercise of any options under the TI Group Employee Share Schemes or the
Smiths Industries Employee Share Schemes). In addition, subject to the Merger
becoming effective, TI Group shareholders will be entitled to receive a
special interim dividend of 12p per TI Group share payable by TI Group plc
for the year ending 31 December 2000.
As announced on 15 September, TI Group plc is continuing with the proposed
sale of its Automotive Systems Division. Allan Welsh will continue as Chief
Executive Officer of the Automotive Systems Division. Following completion of
the Merger, Bill Laule, currently Chief Executive of TI Group, will become
chairman of the Automotive Systems Division.
 
To the extent that the net proceeds from the disposal of TI Group Automotive
Systems exceed £900 million (including net debt assumed by a purchaser but
less all costs and tax), TI Group shareholders will participate in the excess
through an issue of Smiths Industries Loan Notes or cash. On the basis of the
preliminary offers received and its estimate of tax and costs, the TI Group
Board calculates, on a fully diluted basis, that the deferred proceeds would
provide between 20p and 65p per TI Group share.
  
 
Enquiries: 
 
Smiths Industries   020 8457 8203    TI Group        020 7560 5700
Russell Plumley                      Richard Poston     
 
Brunswick           020 7404 5959    Finsbury        020 7251 3801
Alan Parker                          Roland Rudd          
Locksley Ryan                        Rollo Head
 
 
*Nothing in this statement should be construed as a profit forecast or
interpreted to mean that the future earnings per share of Smiths Industries
will necessarily be the same as, or greater than, the historic published
earnings per share of Smiths Industries for completed financial periods
 
 
The Directors of Smiths Industries plc and of TI Group plc accept
responsibility for the information contained in this announcement. To the
best of the knowledge and belief of the Directors of Smiths Industries plc
and of TI Group plc (who have taken all reasonable care to ensure that such
is the case), the information contained in this announcement is in accordance
with the facts and does not omit anything likely to affect the import of such
information. 
 
Chase, which is regulated in the United Kingdom by The Securities and Futures
Authority Limited, is acting for Smiths Industries plc and no one else in
connection with the Merger and will not be responsible to anyone other than
Smiths Industries plc for providing the protections afforded to customers of
Chase, nor for providing advice in relation to the Merger. 
 
UBS Warburg Ltd. ('UBS Warburg'), a subsidiary of UBS AG, which is regulated
in the United Kingdom by The Securities and Futures Authority Limited, is
acting for TI Group plc and no one else in connection with the Merger and
will not be responsible to anyone other than TI Group plc for providing the
protections afforded to customers of UBS Warburg Ltd., nor for providing
advice in relation to the Merger. 
Morgan Stanley & Co. Limited ('Morgan Stanley Dean Witter'), which is
regulated in the United Kingdom by The Securities and Futures Authority
Limited, is acting for TI Group plc and no one else in connection with the
Merger and will not be responsible to anyone other than TI Group plc for
providing the protections afforded to customers of Morgan Stanley & Co.
Limited, nor for providing advice in relation to the Merger. 
 
This announcement does not constitute an offer or invitation to purchase any
securities. The new Smiths Industries plc shares and other securities
referred to in the Scheme Documents have not been and will not be registered
under the securities laws of the United States or any US state and will only
be made available in such jurisdictions under exemptions from such laws. In
addition, no actions have been taken with respect to such securities in
Australia, Canada or Japan. 
 
This announcement contains certain statements that are or may be
forward-looking and which by their nature involve risk and uncertainty.
Factors that could cause actual results and developments to differ from those
expressed or implied by such statements are referred to in the Scheme
Documents. 
 

                                                                                
                                                  

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