1 October 2002

Smiths agrees £235 million cash acquisition of market leader in X-ray detection

Smiths Group today announced that it has reached agreement with Rheinmetall Group of Germany to acquire its specialist X-ray business, Heimann Systems GmbH, for £235 million (Euros 375m) in cash. The acquisition will be funded from Smiths’ existing borrowing facilities and is subject to the approval of the relevant national regulatory authorities in Europe.

Heimann is the world’s market leader in X-ray security systems. The products are primarily used in transportation security for inspecting luggage and freight to detect explosives and other hazardous or illegal contents. The equipment is also used to inspect mail, and to detect metal or other foreign matter. Combining Heimann with Smiths’ trace detection technologies, which detect biological and chemical agents, explosives and narcotics, will give Smiths a unique ability to create integrated systems for the growing security market, worldwide. Another of Heimann’s technologically advanced activities is biometric systems for the digital registration of fingerprints and palmprints, for law enforcement and civilian use.

Commenting on this significant expansion of its core Detection business, Smiths’ chief executive Keith Butler-Wheelhouse said: “Heimann, our fourth Detection acquisition, makes Smiths a world leader in integrated security systems, and will substantially increase the size of our addressable markets in homeland defence and security, by broadening our customer, product and geographic base.”

Heimann’s turnover in the financial year ended 31 December 2001 was £104 million (Euros 167m), earning pre-tax profits of £14 million (Euros 21m). Heimann is showing strong growth and in the financial year to date, has increased sales by more than 50% over the previous year, driven by