Smiths Group PLC, a UK-based global technology company, has entered into a $710 million deal with Safran, the French multinational, to acquire Morpho Detection, its California-based detection and security solutions company. Morpho will become part of Smiths Groups’ detection division.
Morpho manufactures and supplies detection systems and services for airports,borders, and critical infrastructure, such as nuclear power plants. The company’s products are certified by multiple regulatory bodies worldwide, including the Transportation Security Administration, Canadian Air Transport Security Authority, and European Civil Aviation Conference.
Morpho generated approximately $320 million in revenue in 2015, and had an operating profit of $56 million—an 18 percent margin. On December 31, 2015, Morpho had gross assets of $699 million.
The deal follows closely on the heels of last month’s bombings of Brussels International Airport, which put airport security in the spotlight. The strategic rationale behind the acquisition is to strengthen Smith Groups’ ability to compete in the global threat detection market, which the company projects will grow by mid-single digits per annum over the medium to long term.
“The threat environment for people and critical infrastructure around the world is constantly evolving and becoming more complex and sophisticated,” said Andy Reynolds Smith, Chief Executive of Smiths Group. “The response, to keep people safe and the world running, demands cutting-edge technology and cost-efficient solutions.”
Smith continued, “Morpho Detection is a high quality business with a strong management team, and I am convinced that this combination provides a compelling competitive platform for product, service and technology leadership. The acquisition is consistent with our approach to increasingly focus investment in highly attractive technology-led areas, and will create significant value for shareholders and position us for long-term growth.”
The transaction is expected to close in early 2017 and is conditional upon regulatory clearances in the US, Europe and certain other territories, as well as other customary closing conditions.