Consolidation in Security Detection Market
Morpho Detection expands Smiths’ offering of EDS, particularly computed tomography EDS, and adds to its range of products for explosives trace detection, which are based on GC/MS, ion mobility spectrometry, and Raman and FT-IR spectroscopy. Competitors in the security trace detection instrument market include Bruker and Thermo Fisher Scientific. Revenue for Smiths Detection for the fiscal year ending July 31, 2015, declined 8.8% to £467 million ($730 million = £0.64 = $1), or 16% of Smiths total revenues. The majority of both business’s revenues are from the transportation sector.
London, UK 4/21/16; Paris, France 4/21/16—Global technology firm Smiths has agreed to acquire Morpho Detection, a provider of explosives detection systems (EDSs), for a total of $723.7 million in cash, but includes net cash of $13.7 million, from Safran, a high-technology company. Smiths’ Detection division provides products for the detection of explosives, chemical and radioactive materials, and contraband. Morpho Detection supplies detection systems for airports, borders and other infrastructure sites. In 2015, Morpho Detection recorded $320 million in revenues and EBITDA of $70 million. “I am convinced that this combination provides a compelling competitive platform for product, service and technology leadership,” stated Smiths Chief Executive Andy Reynolds Smith. Smiths stated that the acquisition will expand its product offerings, broaden its international presence, add to its aftermarket revenues and enhance its software engineering capabilities. The purchase is expected to result in mid-single digit EPS accretion in the first full year. Smiths estimated annual cost synergies of $30 million in the third full year following the purchase, which is expected to close in early 2017, pending regulatory approval.
