Smiths Group expands HVAC Market reach with $40.5m Duc-Pac acquisition

Smiths Group plc, a global leader in industrial technology, has reinforced its presence in North America’s heating, ventilation, and air conditioning (HVAC) sector with the acquisition of Duc-Pac Corporation. The deal, valued at $40.5 million (£32 million), enhances Smiths Group’s HVAC metal duct expansion strategy, bolstering its Flex-Tek division’s capabilities in the construction industry.

Duc-Pac, a well-established U.S.-based manufacturer of metal ducting solutions, will now be integrated into Flex-Tek’s construction segment, positioning Smiths Group for broader geographical coverage, particularly in the northeastern United States. This move aligns with the company’s growth strategy, focusing on high-margin acquisitions that provide cross-selling opportunities and increased market penetration.

The HVAC sector has witnessed heightened demand as governments and industries prioritize energy efficiency, sustainability, and advanced building technologies. By acquiring Duc-Pac, Smiths Group is securing a stronger foothold in a market that continues to evolve with new regulatory standards and increasing construction activity.

What Makes the Duc-Pac Corporation Deal a Strategic Move for Smiths Group?

Smiths Group has long been recognized for its disciplined approach to mergers and acquisitions, targeting businesses that complement its existing portfolio. Duc-Pac Corporation, known for its specialized expertise in metal ducting solutions, brings an established customer base and operational efficiencies that align with Flex-Tek’s growth objectives.

Flex-Tek, which operates across industrial, aerospace, and construction markets, has been expanding its HVAC metal duct expansion capabilities through strategic acquisitions. The addition of Duc-Pac follows previous purchases of Modular Metal Fabricators and Wattco, further strengthening Flex-Tek’s competitive advantage in HVAC and electrical heating solutions.

The acquisition was completed at a 7.2x trailing 12-month EBITDA, a valuation that reinforces Smiths Group’s commitment to acquiring businesses that provide immediate value. Given that Duc-Pac Corporation’s profit margins are accretive to those of Flex-Tek, this deal is expected to contribute positively to the company’s overall financial performance.

How Does the Acquisition Align with Smiths Group’s Long-Term Strategy?

Smiths Group has been undergoing a strategic transformation, focusing on its high-performance industrial technology divisions while divesting non-core assets. As part of this shift, the company is advancing plans to separate Smiths Detection and Smiths Interconnect, allowing for a sharper focus on John Crane and Flex-Tek, the two businesses expected to drive long-term growth.

The HVAC industry presents a significant opportunity for expansion, with increasing demand for sustainable construction materials, improved indoor air quality solutions, and energy-efficient building infrastructure. The integration of Duc-Pac Corporation into Flex-Tek aligns with these industry trends, positioning Smiths Group as a key player in HVAC metal duct expansion within the North American market.

Beyond the immediate benefits of expanded geographical coverage and operational synergies, this acquisition also reinforces Smiths Group’s commitment to delivering shareholder value through targeted investments and disciplined capital allocation. The company has already raised its share buyback program from £150 million to £500 million, signaling confidence in its financial strategy and long-term market positioning.

How Has Smiths Group’s Stock Performance Responded to Its Expansion Efforts?

Smiths Group’s financial and strategic moves have drawn considerable investor interest, particularly in light of its robust half-year results and ongoing acquisition strategy. As of March 25, 2025, the company’s stock is trading at 1,997.00 GBX, reflecting a strong market position despite being 8.73% below its 52-week high of 2,188.00 GBX recorded in January.

The company’s most recent earnings report revealed a 6.7% increase in revenue to £1.6 billion and a 9.5% rise in operating profits to £269 million, demonstrating continued business expansion and operational efficiencies. Analysts currently rate Smiths Group as a “Moderate Buy”, with a 12-month price target of 2,345.00 GBX, suggesting a potential upside of 18.49% from current levels.

Given its consistent revenue growth, strategic acquisitions, and shareholder-friendly policies, Smiths Group is well-positioned for long-term value creation. Investors seeking exposure to industrial technology and infrastructure growth may consider a “Buy” recommendation, with an eye on further market developments and the company’s execution of its acquisition-led expansion strategy.

Why Is the HVAC Market a Key Growth Area for Smiths Group?

The HVAC industry has been undergoing a transformation, driven by stringent energy efficiency standards, sustainability initiatives, and technological advancements. The demand for high-performance HVAC components is increasing as commercial and residential construction projects seek cost-effective, durable, and environmentally friendly solutions.

With Duc-Pac Corporation’s strong manufacturing capabilities in metal ducting, Smiths Group is now better positioned to address growing demand in North America. The acquisition complements Smiths Group’s previous investments in HVAC and industrial heating, allowing it to deliver a more comprehensive range of solutions to contractors, builders, and infrastructure developers.

Additionally, the U.S. construction sector—despite short-term fluctuations—continues to benefit from government-backed infrastructure projects, renovations, and retrofitting initiatives. By reinforcing its presence in the HVAC metal duct expansion market, Smiths Group is capitalizing on these long-term industry tailwinds.

What’s Next for Smiths Group After the Duc-Pac Acquisition?

With its focus on high-growth, high-margin businesses, Smiths Group is likely to continue pursuing bolt-on acquisitions that enhance its existing capabilities. The company’s recent financial results and shareholder return strategies indicate a well-balanced approach to organic and inorganic growth.

The acquisition of Duc-Pac Corporation not only strengthens Smiths Group’s Flex-Tek division but also reinforces its position in the North American HVAC market, setting the stage for further expansion opportunities. As Smiths Group continues to optimize its portfolio and drive operational efficiencies, its long-term growth trajectory remains solid, supported by industry trends favoring sustainable and energy-efficient infrastructure solutions.

For investors, Smiths Group’s strong financial outlook, disciplined capital allocation, and expansion into key industrial markets make it an attractive stock to watch. With its strategic acquisitions, growing market share, and robust earnings performance, Smiths Group remains a compelling player in the global industrial technology space.