How to resolve AdBlock issue? Smiths Detection news
Smiths Detection Inc. announced a $17.2 million follow-on production order from the U.S. Army for additional Joint Chemical Agent Detector (JCAD) program and the plans for an acquisition of Morpho.
Let's look at the larger story first: Smiths Group plc announced that it had entered into an agreement to acquire Morpho Detection, a California-based detection and security solutions company, from Safran for an enterprise value of $710 million. The closing of the Acquisition is subject to customary conditions, including regulatory approvals. Upon closing, Morpho Detection will be merged with Smiths Group’s Detection division. Smiths Detection is a world leader in products and services that 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 such as nuclear power plants, military installations and government buildings. Andy Reynolds Smith, Chief Executive of Smiths Group, said: “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.”
Much more information on the acquisition can be found here and here
It will be an interesting purchase. Those with long memories will remember that Safran/Morpho bought the homeland security arm of General Electric way back in 2009 (here). GE was one of the first out of the blocks getting their CTX 5000, a CT-based explosive detection system, certified by the Federal Aviation Administration in 1994. Since then the market has got tougher, with greater industrial consolidation and new products from companies such as Smiths Heinemann and Rapiscan creating greater technological competition. In addition to the baggage screening products Morpho also worked up hand-portable explosives and narcotics detectors, such as the Itemiser, Mobiletrace and Streetlab. Fair to say that none of these has ever achieved the market coverage of the CTX 5000, which had 2,000 units used worldwide.
The biggest element of this acquisition will be the market share that it gives to the old Heinemann part of Smiths, which will now juggle the various X ray and CT scanners into its portfolio. While the handheld devices might not be competitors to Smiths existing portfolio per se, it will be hard to see their Ion Trap Mobility Spectometry product line achieving the same formidable market penetration that Smiths has had with their CAM and LCD products. These are likely to be a harder fit, and it will be interesting to see where products such as StreetLab are in the next year or two. Smiths also had to shut a variety of plants last year, and it will be interesting to see where the Morpho product line will be constructed in the next year or two.
As an example of this market saturation of Smiths' LCD was the announcement that their 3.3 was going to have an additional $17.2 million follow-on order added to it. Details were light in terms of numbers of units and who they were going to, and this is neither the first or (likely) last time that option will be exercised.