Smith shares spike on rejected £2.45bn bid

ENGINEERING conglomerate Smiths Group, headed by former ScottishPower chief executive Philip Bowman, saw its shares rise sharply yesterday amid speculation that its rejection of a £2.45 billion bid for its medical division could spark wider interest in the group.

Buyout group Apax is understood to have been behind the approach for Smith's medical services unit which the company said was not high enough to justify entering disposal talks.

But analysts believe the move could signal more corporate activity around the firm with Roger Johnston of Edison questioning whether it was the start of the "end-game" for the company.

"With the turn-around nearly complete and markets in recovery-mode, we feel that it is only a matter of time before a satisfactory bid will kick-start the process," he added.

Sandy Morris of RBS said while he agreed with the decision to reject the offer for the medical division, the wording of the company's statement suggested a higher price would succeed. He also believes that if "open season" was declared on the group as a whole, the share price could rise as high as 1,674p.

Shares in Smiths Group closed up 99p, or 7.7 per cent, at 1,381p yesterday.

Meanwhile, shares in artificial knee and hip maker Smith & Nephew rose by 24p to 709p after reports that Johnson & Johnson was considering a fresh takeover approach worth at least 800 pence a share.