Smiths Group To Buy Morpho Detection From Safran For $710 Mln - Quick Facts

(RTTNews) - British technology company Smiths Group plc (SMIN.L) announced Thursday that it has entered into an agreement to acquire Morpho Detection, a California-based detection and security solutions company, from French technology firm Safran (0IU8.L, SAFRF.PK) for an enterprise value of $710 million or 493 million pounds.

The closing of the acquisition is subject to customary conditions, including regulatory approvals. Completion of the Acquisition is expected to take place in early 2017.

Upon closing, Morpho Detection will be merged with Smiths Group's Detection division, whose products and services detect a wide range of threats, including explosive, chemical and radioactive materials, and contraband.

Morpho Detection manufactures and supplies detection systems and services to improve mission-critical security at airports, borders and other high-risk critical infrastructure sites. Morpho Detection had total revenues of $320 million in 2015 with an operating margin of 18%.

The company's expected annual cost synergies of about $30 million will be delivered by the third full year following closing. The company expects mid-single digit earnings per share accretion in the first full year of ownership.

In the event that regulatory clearances are not obtained, Smiths can terminate the acquisition agreement and, in this case, will be required to pay a termination fee of $40 million to Safran.