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Monday, 18 September, 2000, 14:21 GMT 15:21 UK
Engineering rivals to merge
Flight Management System
Hi-tech: Smiths Industries flight management systems
UK engineering group Smiths Industries is to merge with smaller rival TI Group, creating a new company worth 4.5bn.

The deal, announced on Monday morning, is expected to strengthen Smiths' hand in the aerospace industry.

It follows last year's take-over of Marconi Electronic Systems by British Aerospace to form BAE Systems, which sparked a wave of consolidation in the sector.

So far, analysts appear unimpressed by the merger. Smiths' share price went down by more than 13% to 724 pence on announcement of the deal. TI's share price remained stable at 375p.

'exciting prospects'

Smiths Industries employs 15,000 people across 50 different businesses, making a range of products from aircraft control systems to hospital life support machines.

Chief executive Keith Butler-Wheelhouse says: "There are exciting prospects in the aerospace, medical and telecoms sectors and we are grasping the opportunities offered by each of them."
Keith Butler-Wheelhouse
Keith Butler-Wheelhouse

Aerospace will account for about 40% of the new company's total turnover of 3bn.

Its' seals business, which serves the industrial automotive and aerospace industries, will account for about 35% of its turnover.

Separately, TI said it would sell its automotive systems division, which makes high-value parts for the car industry.

The merger announcement came as Smiths revealed full-year pre-tax profits of 266m, up 11% from 241m last year.

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See also:

14 Sep 00 | Business
BAE Systems profits boost
10 Jul 00 | Business
Aerospace giant's muted launch
25 Jul 00 | Business
Airbus wins $7.5bn aircraft order
14 Oct 99 | The Company File
European aerospace giants merge
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