Smiths/TI merger in jeopardy

AMID reports that US counter-bidders are circling, Smiths Industries spent this weekbattling to convince investors that its planned merger with TI Group makes sense.

The proposed merger, which would create one of the UK’s biggest engineering companies, has gone down badly with the City, which has questioned its long-term strategic benefits. Within days, the markets pegged back Smiths’ shares from more than £8 to around £6.70.

Unconfirmed reports from the US suggest that three electronics and engineering giants – Tyco, Honeywell and United Technologies are separately considering a counter-bid for TI Group, various parts of which would fit with their own operations.

Analysts said that every fall in Smiths’ share price reduces its attractiveness to TI’s investors, making a counter-bid more likely to succeed.