Smiths Group jumps as £1.3bn Interconnect sale to Molex marks sharper industrial pivot

Shares of Smiths Group plc (LON: SMIN) climbed over 2.6% on the London Stock Exchange today after the British engineering conglomerate announced the sale of Smiths Interconnect to Molex Electronic Technologies Holdings LLC, a Koch Industries subsidiary, in a deal valued at £1.3 billion. The transaction is the latest step in Smiths Group’s ongoing transformation into a high-performing industrial engineering player.

The stock was last seen trading at 2,428 GBX, up 62 points from the previous close, and touched a high of 2,446 GBX during intraday trading. The divestment, announced early on October 17, aligns with strategic actions first outlined by Smiths Group on January 31, 2025, and follows the earlier disposal of its U.S. sub-systems business within the same unit.

What are the key terms and financial highlights of the Smiths Interconnect sale to Molex?

The enterprise value of £1.3 billion reflects a valuation multiple of 15.1x FY2025 EBITDA for Smiths Interconnect, which generated £86.1 million in headline EBITDA for the period. The transaction involves all-cash consideration, subject to customary working capital, cash, and debt adjustments.

Completion is expected in H2 FY2026, pending regulatory approvals and the legally required consultation with Smiths’ French Works Council. Under French labour law, this advisory process must precede any binding share purchase agreement, although the final decision remains non-binding and consultative in nature.

According to the announcement, once the consultation concludes, Smiths will have the unilateral right to enforce the transaction through a binding share purchase agreement with Molex. The deal is subject to standard regulatory and closing conditions.

How does the Interconnect divestment fit into Smiths Group’s wider strategic overhaul?

Smiths Group has been steadily unwinding its non-core businesses to sharpen its focus on industrial engineering. This latest divestment follows the earlier sale of the U.S. sub-systems arm of Smiths Interconnect, which was completed in October 2025.

The move advances Smiths Group’s broader repositioning efforts, which include an ongoing £500 million share buyback expected to conclude by the end of calendar year 2025. Proceeds from the Interconnect sale will partly go toward shareholder returns, while management remains committed to preserving its investment-grade credit rating and a “disciplined balance sheet,” according to its statement.

The Board of Smiths Group is scheduled to provide further details on capital allocation and use of proceeds in its Q1 FY2026 Trading Statement, due on November 19, 2025.

What is the institutional sentiment around Smiths Group’s transformation strategy?

The market has responded positively to Smiths Group’s deliberate reshaping of its portfolio. Institutional investors have viewed the Interconnect business, which catered to niche applications in aerospace, defense, medical, semiconductor testing, and industrial sectors, as non-core compared to Smiths’ flagship divisions.

Analysts believe the 15.1x EBITDA multiple achieved on this sale signals robust underlying asset quality and favourable market demand for high-reliability connectivity businesses. Some fund managers reportedly see Smiths’ disciplined capital return and sharpening focus as value-unlocking for long-term investors.

With Smiths Detection also on the block—being evaluated for both sale and demerger options—market participants expect further simplification of the group’s structure in 2026.

How does the deal impact Molex’s aerospace and defense positioning?

From Molex’s perspective, the acquisition builds upon its aerospace and defense strategy, particularly after acquiring AirBorn in November 2024. The addition of Smiths Interconnect enhances Molex’s footprint in advanced connectivity for critical systems—especially those requiring RF, optical, and microwave solutions.

Molex CEO Joe Nelligan was quoted saying the deal “strongly enhances the platform” and provides “complementary technologies, customers, and global reach.” Smiths Interconnect currently operates 21 R&D, sales, and manufacturing sites across 12 countries, including the U.S., Canada, France, Germany, India, China, and the UK.

This expansion aligns with Koch Industries’ broader trend of bolstering industrial technology holdings, particularly those with high-reliability applications in national security and next-gen medical devices.

What will happen to Smiths Interconnect employees and facilities under Molex?

The announcement confirmed that all Smiths Interconnect employees and operations will transition to Molex upon closing. Smiths Group CEO Roland Carter expressed appreciation for Interconnect’s historical contribution and confidence in Molex’s stewardship, saying the acquirer is “well placed to support their future growth.”

While Molex has not detailed any post-acquisition restructuring plans, its prior integration of AirBorn was reportedly smooth, with minimal workforce disruption. Stakeholders will watch closely for any rationalisation or technology integration moves across Molex’s portfolio.

How is the market reacting to Smiths Group shares and what are analysts saying?

At 15:09 BST, shares of Smiths Group traded at 2,428 GBX, reflecting a 2.62% gain from the previous close. The session’s low was 2,378 GBX, and the high touched 2,446 GBX, suggesting strong intraday sentiment and elevated institutional buying interest post-announcement.

The company is a constituent of the FTSE 100 index, and its trading status remains “Normal – Regular Trading.” The stock appears to be benefiting from investor optimism around portfolio simplification and return of capital themes.

Analysts expect that once Smiths Detection’s fate is sealed—either via spin-off or third-party sale—the resulting entity could become leaner, more predictable, and easier to model for fund managers. Some see a potential re-rating in store if Smiths follows through with capital allocation discipline and operating margin improvement across its core divisions.

What should investors watch for in the next quarter as Smiths accelerates portfolio streamlining?

Investors should monitor the November 19, 2025 trading statement, where Smiths is expected to provide updated guidance on cash deployment, debt ratios, and possibly further divestiture timelines. The company is also likely to update on the Smiths Detection process and its impact on FY2026 earnings.

With back-to-back asset sales in less than 12 months and a £500 million buyback nearing conclusion, analysts anticipate that any additional returns—such as special dividends or debt reduction—will be closely scrutinised by rating agencies and large-cap funds.

What are the most important investor takeaways from the Smiths Interconnect divestment deal?

• Smiths Group plc (LON: SMIN) is divesting Smiths Interconnect to Molex for £1.3 billion, representing a 15.1x EBITDA multiple.

• The sale is part of a broader portfolio simplification strategy, first announced in January 2025, aimed at focusing on core industrial engineering operations.

• Smiths Interconnect generated £86.1 million in headline EBITDA for FY2025, excluding the already divested U.S. sub-systems unit.

• Completion of the transaction is expected in the second half of FY2026, following consultation with the French Works Council and regulatory approvals.

• Smiths will return a substantial portion of the proceeds to shareholders while maintaining an investment-grade credit rating.

• Molex gains a globally scaled business with 21 facilities across 12 countries, enhancing its aerospace and defense connectivity offerings.

• The deal follows Molex’s acquisition of AirBorn in 2024, indicating sustained expansion into high-reliability sectors.

• Smiths Group shares rose 2.62% intraday to 2,428 GBX following the news, with investor sentiment buoyed by the deal’s strategic clarity and return potential.

• Analysts anticipate more restructuring to follow, including updates on Smiths Detection in the upcoming Q1 FY2026 trading statement due November 19, 2025.

• The £500 million share buyback remains on track to conclude by year-end 2025, adding further shareholder return momentum to the divestiture strategy.